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Construction and expansion of new pipelines

Construction and expansion of new pipelines

For example, both sites are within the TEXOMA distribution system which has seen several major infrastructure changes over the past two years, including reversals of the Seaway and Shell Ho-Ho pipelines, construction and expansion of new pipelines and the southern leg of the Keystone pipeline being put into service.

But options to move crude out of the system remain limited, DOE said.

"During the test sale, purchasers had problems getting capacity on the Ho-Ho pipeline for preferred deliveries and had to make adjustments by shipping crude oil to the Sun Nederland terminal and placing the oil into temporary storage until pipeline capacity became available," the report states.

Additionally, storage capacity at Sun Nederland is now fully subscribed and distribution during a potential SPR drawdown may be impacted if a purchaser does not have access to storage at this terminal, DOE said.

At the same time, crude movement was also inhibited by the limited number of docks available for use by tank barges and, possibly, by a lack of US flagged tank ships, DOE said.

DOE said one purchaser, who was not identified, requested a delivery by tank ship and then submitted a request to federal authorities for a waiver to the Jones Act, which requires vessels moving goods between US ports to be US-flagged. The purchaser, which did not explain why it needed the waiver, withdrew the request before it was ruled on, DOE said.

"The purchaser ultimately accepted delivery via pipeline in lieu of using marine transportation," DOE said. "As a result, no deliveries were made by larger US flag tank ships."

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