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Pipeline operators are asking oil companies to shut down production when storage is full

A new problem attributed to the coronavirus pandemic is slowly brewing in the oil field.

Pipeline operators with full storage tanks are calling on some Texas oil companies to shut down production as the ongoing price war between Russia and Saudi Arabia has exacerbated global supply, while the pandemic has dramatically reduced global demand.

In one Saturday morning tweetTexas Railways Commissioner Ryan Sitton, one of three officials elected to oversee the state agency regulating the oil and gas industry, reported that some oil companies receive letters from shippers asking them to cut production because they no longer operate Bearings are.

“They face a situation where COVID-1

9 destroys so much demand and oil flows that there is no place to go,” Sitton told the Houston Chronicle. “The supply chain faces a problem and secures itself right down to the petrol stations.”

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The storage problem, Sitton said, seems to hit pipeline companies the most with contracts to buy crude oil directly from local producers. These pipeline companies, he said, are moving the purchased oil to storage tanks for future sale.

With gasoline demand dropping due to pandemic downtime and the price war leading to unattractive, 18-year crude oil prices of $ 21 a barrel, the oil is only in storage tanks that get fuller every day.

“Right now we have a common enemy as a globe and it’s COVID-19,” said Sitton. “We have to do things we’ve never done before because we’re facing a problem we’ve never faced before.”

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Sean, CEO of Port of Corpus Christi Strawbridge The waterway in southern Texas uses government critical infrastructure designation to continue construction for storage tanks that can hold between 12 and 15 million barrels, among other things.

After social distancing and other security precautions, storage tank and pipeline operators like Buckeye Partners, Moda Midstream, Epic Midstream and Flint Hills Resources will complete their expanded facilities in the next two or three months. Strawbridge said.

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Ed Longanecker, president of the Texas Independent Producers & Royalty Owners Association, said some of the letters received by oil companies say shippers are terminating or reducing oil purchase contracts due to a back-up inventory due to a decline in demand and a slowdown in the refinery.

“TIPRO urges President Donald Trump to escalate US diplomatic efforts with Saudi Arabia and Russia in response to their deliberate decision to flood global markets with oil while considering other options to protect domestic energy producers,” Longanecker said.

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