The Dwarfing size of North American Oil and Gas Infrastructure

Oil and gas infrastructure in North America today is extensive and complex, with a range of infrastructure types used for exploration, production, transportation, and refining. The United States and Canada are the two major oil and gas producers in North America, with significant infrastructure in both countries. Mexico does produce, but lags significantly behind the United States and Canada. The United States is by far the largest importer of Canadian production. Mexico imports large amounts of natural gas from the United States.

Pipelines are the primary mode of transportation for crude oil and natural gas in North America, with over 3.2 million miles of pipeline in the United States alone (200,000 miles for crude, and 3,000,000 miles for natural gas). The majority of pipelines in North America are owned and operated by private companies, with some owned by government entities.

The pipeline network is divided into three main systems: gathering systems, transmission systems, and distribution systems. Gathering systems bring oil and gas from wells to processing facilities, while transmission systems transport the products over long distances to refineries and other destinations. Distribution systems then deliver the finished products to consumers.

The state of pipeline infrastructure in North America has been a topic of controversy in recent years, with concerns raised about the safety and environmental impact of pipelines. The Keystone XL cross-border pipeline project was canceled after the Biden Administration revoked a key permit. But even so, despite these concerns, a vast pipeline network remains a crucial part of the North American energy system.

In addition to pipelines, North America has a significant number of refineries, which convert crude oil into finished products such as gasoline, diesel fuel, and jet fuel. The United States has the largest number of refineries in North America, with over 130 refineries in operation. Canada has around 20 refineries, with most of them located in the eastern part of the country. Mexico also has a small number of refineries. The number of refineries in North America has been going down for several decades, and the construction of a new refinery would be unthinkable today.

However, some expansion of existing refineries has significantly increased refining capacity in the United States. In March, ExxonMobil announced the successful startup of its Beaumont refinery expansion project, which added 250,000 barrels per day of refining capacity to one of the largest refining and petrochemical complexes along the U.S. Gulf Coast. This expansion was necessitated by ExxonMobil’s crude production in the Permian Basin which continues to grow. Storage facilities are also an essential part of the oil and gas infrastructure in North America.

These facilities are used to store crude oil, refined products, and natural gas in large tanks or underground caverns. The United States has the largest storage capacity in North America, with over 600 million barrels of crude oil storage capacity. Canada has a fraction of that.

Cushing, Oklahoma, is a critical storage hub for crude oil in the United States and plays a vital role in the oil and gas infrastructure of North America. Cushing is home to several large crude oil storage facilities, including the Cushing Terminal, the delivery point for the West Texas Intermediate (WTI) crude oil futures contract traded on the New York Mercantile Exchange (NYMEX). Cushing’s strategic location at the crossroads of several major pipelines, including the Keystone Pipeline and the Seaway Pipeline, makes it a crucial hub for transporting crude oil from production areas in the Midwest and Canada to refineries on the Gulf Coast and the East Coast.

As a result, Cushing is often referred to as the “pipeline crossroads of the world” Storage capacity at Cushing is roughly 15% of total storage capacity in North America.

Cushing capacity is closely monitored by traders, analysts, and policymakers as it can have a significant impact on crude oil prices and supply dynamics in the United States. When the storage facilities in Cushing reach capacity, it can lead to a buildup of crude oil supply and put downward pressure on prices. Conversely, when storage levels are low, it can lead to supply shortages and put upward pressure on prices. This is the normal pattern. But sometimes that pattern can be defied – such as the right now (May 2023).

All in all, despite facing headwinds such as capital constraints, environmental concerns, and constantly changing global energy markets, the oil and gas infrastructure in North America has demonstrated significant resilience. The extensive and complex network of pipelines, refineries, storage facilities, and other infrastructure types has shown its ability to adapt to changing market conditions and maintain stable supply chains. The industry has also made investments in new technology and infrastructure to improve efficiency, safety, and environmental performance.

Furthermore, the diversified sources of oil and gas production, including onshore and offshore production, provide North America with a range of options to meet its energy demands and maintain a level of energy security. Overall, the resiliency of North America’s oil and gas infrastructure highlights the importance of this industry to the regional and global energy systems.