Operational constraints limit crude storage at U.S. refineries

Getty Images

Getty Images

U.S. commercial crude stocks are still close to their highest levels in over 80 years, but operational requirements prevent refineries filling on-site storage facilities to their maximum capacity.

An increasing proportion of U.S. crude oil stocks is held in off-site tank farms, some owned or leased by refiners themselves, but many owned or leased by marketers and traders.


According to the Energy Information Administration (EIA), which surveys storage capacity every six months, total crude in storage at the end of March was 475 million barrels, and the country had capacity to store up to 660 million.

Related: If oil export ban is lifted, refiners will lose: EIA

Only 182 million barrels of storage capacity, around 28 percent, was on site at oil refineries. The rest was off site at tank farms or in pipelines, railroad tank cars, barges and oilfield tanks.

Most of the crude at refineries and tank farms is stored in giant cylindrical tanks with a roof that floats directly on the surface of the oil.TSRlogo1

Storage tanks need to be kept filled to a minimum of around 20 percent to support the roof and operate the pipes and other equipment.

Adjusted for these tank bottoms, the effective or “working” capacity of refinery storage tanks was 150 million barrels, according to the EIA (“Working and net available shell storage capacity”, May 2015).

But at the end of March, U.S. refineries were storing only 104 million barrels, equivalent to just 69 percent of their maximum working capacity and 57 percent of the total storage volume.


EI Creative cropRefinery storage is subject to various operational constraints that make it hard for refiners to fill tanks to the top.

Refinery tanks are commonly divided into storage tanks, which receive the crude oil, and charging tanks, which feed crude into the atmospheric distillation units (

Storage tanks receive the oil via a pipeline or pumped in from railroad tank cars or ships. Crude must normally be allowed to stay in the storage tank for a minimum of 24 hours to allow any water mixed with the oil to separate.

In general, storage tanks cannot receive crude from the pipeline and transfer oil to the charging tanks at the same time.

Most tanks will contain a mix of different crudes from different sources and added to the tank at different times, and refineries track the average composition of crude in the tank.

When a tank is discharged it cannot be emptied completely, and the remaining oil, known as the “heel”, is mixed with the next crude parcel added.

Related: $20 oil is possible, says Goldman Sachs

To maximize profit margins, it is better to fill a storage tank with similar crudes, to reduce the amount of value lost through mixing and degradation.

In other words, refiners try to avoid putting a premium light crude into a storage tank that has previously held heavy oil…(Read full article)

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