Friday, October 8, 2010

Eagle North pipeline to link Valero Ardmore refinery to Cushing

ARDMORE Okla. - The Valero refinery in Ardmore will soon be able to tap into cheap crude oil at the giant Cushing, Okla., storage hub, possibly easing a bottleneck that has distorted benchmark U.S. oil prices for years.

Blueknight Energy Partners LP expects to complete its Eagle North pipeline reactivation project in the fourth quarter, connecting Valero Energy Corp's Ardmore refinery with Cushing for the first time, a Blueknight spokesman said.

The partnership, controlled by global oil trading giant Vitol, declined to discuss the capacity or expected throughput of the pipeline, citing competitive concerns and regulatory constraints.

An industry rule of thumb suggests the eight-inch pipeline could carry up to 32,000 b/d of crude oil.

U.S. West Texas Intermediate crude oil futures, which have their delivery point at Cushing, have often traded at a substantial discount to North Sea Brent due to a shortage of outbound pipeline capacity at Cushing.

The 90,000 b/d Ardmore refinery currently runs crude oil produced in Oklahoma as well as oil brought up from the coast of the Gulf of Mexico, Valero spokesman Bill Day said.

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