Cushing, Oklahoma’s giant crude oil storage hub will be linked to Colorado’s Niobrara/Codell shale oil production upon construction and completion of a new 550-mile pipeline between Weld County Colorado’s Wattenberg field and NGL Energy Partners’ (ticker: NGL) Cushing terminal.

When completed and operating, the proposed Grand Mesa Pipeline, a joint venture project proposed by NGL Energy Partners LP and Rimrock Midstream LLC, could eventually move more than 130 MBOPD from the D-J Basin through Cushing to Midwest oil refineries, according to a press release.

“The construction of the Weld County pipeline project will help further develop the crude and condensate-rich areas in and around the DJ and Wattenberg fields,” the NGL press release said.

This new pipeline will be “the third major pipeline connecting to the already busy Cushing hub. Enbridge (ticker: ENB) is putting the finishing touches on its Flanagan South project from the Chicago area to Cushing, while Tulsa-based SemGroup completed its White Cliffs II earlier this summer. The White Cliffs II, which “twins” the same route as the first White Cliffs pipeline, also runs from Colorado to Cushing,” according to an article in the Tulsa World.

“Cushing is the pricing settlement point for West Texas Intermediate crude on the New York Mercantile Exchange. The tank farms there hold more than 70 million barrels and include terminals for Rose Rock, Enbridge, Plains All-American Pipeline, Magellan Midstream Partners and others,” the article reported.

To California via Rail

Meantime, Alon USA Energy Inc. (ticker: ALJ)won approval to build a rail terminal in California that will connect  U.S. Midcontinent oil producers with California refiners.

“The Kern County Board of Supervisors voted unanimously in Bakersfield yesterday to approve Alon’s $170 million plan to upgrade units at the refinery, unload about 150,000 barrels of oil a day from trains and send crude it doesn’t use by pipeline to other plants in the state. The complex may attract supplies from as far off as Texas as producers pulling record volumes out of shale formations search for buyers, Paul Eisman, Alon’s chief executive officer, said by telephone today,” Bloomberg reported.

“Alon’s complex will expand California refiners’ access to North American oil sources that they can’t reach by pipeline, including heavy crude from Canada and light oil from North Dakota’s Bakken and Colorado’s Niobrara shale formations.

“Construction on the rail project is expected to take nine months and may be finished by the end of the third quarter of 2015, Eisman said. While Alon is still performing engineering work on the refinery’s restart, the plant may return to service in 2016 and run a blend of California crude and light oil delivered by train, Eisman said.

“California’s oil-by-rail shipments have jumped to a seasonal record of 16,373 barrels a day as the state’s refiners turn to trains to access surging production from U.S. shale formations. The boom has boosted domestic output to the highest level in 28 years… ,” the Bloomberg report said.

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