A review of one sector of the energy exploration in the Permian Basin where several Oklahoma firms are active shows a growing demand for diesel to fuel the thousands of trucks in the area.
One report indicated the diesel is not only for fueling the oil and gas rigs but the trucks moving oil as well as frac sand. And as the oil production increases, so does the demand for diesel fuel.
While new pipelines to carry oil and gas out of the region to the Gulf Coast refineries are under construction, there is a need for trucks to do much of the work.
Move of the crude by rail is limited and is not enough to move an estimated 800,000 barrels a day of crude production. Some of the new pipelines won’t come online until the second half of next year.
Do the math. As of May 11, there were more than 520 rigs working in the Permian Basin. A rig can use up to 50 barrels of diesel a day.
One of the companies involved in the flow of crude oil out of the Permian is Magellan Midstream, headquartered in Tulsa. The company recently extended an open season to expand capacity on the western leg of a pipeline in Texas. But on Monday, it also announced it would raise its capacity by 50,000 barrels a day up to 150,000 b/d by mid-2020.
Magellan is also planning another open season to consider demand to boost the pipeline capacity to 170,000 barrels a day.
Then there is Holly Energy Partners, the Texas company with refineries in Tulsa and in El Dorado, Kansas. The firm is moving ahead with construction of a truck rack in Orla, Texas. It will be capable of providing 30,000 barrels a day of diesel to the market.