Crude Oil Storage * Oil Gathering * Tanks & Tank Farms * Terminalling
What is Terminalling?
Terminalling - also referred to as "Terminalling and Storage" refers to the midstream natural gas gathering and crude oil gathering, pipeline, transportation and storage facilities. Terminals are facilities where natural gas and crude oil is transferred to or from storage, transportation network (other pipelines or trucks) for distribution, refining (for crude oil) or gas processing (for natural gas).
Terminals are an integral and key
component in the natural gas and crude oil to end-users by providing natural
gas and crude oil storage, as well as inventory management,
distribution and gas processing and
blending to achieve "pipeline
quality gas" and specific crude oil grades.
What is a "Contango?"
"Contango" has been in the news lately relating to Crude Oil Storage, and the lack of adequate supplies for crude oil storage. In crude oil storage, contango exists when the futures price (also known as the " forward price") of oil (or other commodity) is higher than the anticipated spot price of oil.
In a contango
scenario, market " hedgers" of that commodity as well as arbitrageurs
and speculators willingly pay more now for oil at some point in the future than the actual expected price of the commodity
at that future point in time. This typically occurs as the market-makers
(arbitrageurs and speculators) prefer to pay a premium to have the oil in the future rather than
incurring the costs of crude oil storage and carrying costs of buying oil today.
The opposite market condition of contango is "backwardation." A market is in backwardation when the future price of oil is below the expected future spot price for oil. This is favorable for those investors who have " long" positions since they want the futures price of oil to rise.
Crude Oil Storage?
Crude oil storage is a process of storing crude oil, after it is produced, until such time it is used as a feedstock at refineries for making petroleum products such as diesel, gasoline, heating oil and other fuels.
What is Oil Gathering?
Oil Gathering is similar to Gas Gathering as both sectors are in the "midstream" sectors of the oil and natural gas industries.
Oil gathering systems are the physical facilities that accumulate and transport crude oil from the well where the oil gas exits the wellhead, to an acceptance/injection point for an oil pipeline, terminal or other midstream point.
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