More than 7mn bpd of crude oil pipeline capacity connects to the Cushing,

OK, storage hub. Historically, most of those pipelines had a single point of

origin and one destination. But, times have changed. To take advantage

of booming production regions and burgeoning export markets, pipeline

operators and shippers added numerous injection, offtake, and other

pipeline interconnectivity points. Today, Cushing’s pipeline infrastructure

resembles a convoluted spider’s web.

Even though many of these offtake and injection points are not new within

the last five years, the volumes and utilization rates of those linkages

have evolved. Many of these interconnectivity changes have an impact on

Cushing storage levels and the overall crude slate selected by refineries.

This analyst insight report discusses Genscape’s new remote sensing

technique, TankFlow, which uses a set of innovative image processing

techniques and machine learning algorithms to measure those volumes. With

TankFlow, Genscape provides subscribers with a nuanced, never-before-seen

view into the Mid-Continent crude oil supply chain.

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Genscape is the leading global provider

of near-real-time data and intelligence for

commodity and energy markets. Using patented

technologies and proprietary algorithms,

Genscape provides accurate and timely

fundamental data on capacities, flows, and

utilization of the global oil supply chain.

This fundamental data removes much of the

opacity that causes market participants to

otherwise rely on speculation, estimates, or

delayed public data. Genscape’s TankFlow

uses image processing combined with

machine learning techniques to provide more

transparency to crude oil transportation.

Genscape subscribers receive insight into the

overall Cushing balance.

ANALYST INSIGHT SERIESOIL

Genscape Adds Image Processing and Machine Learning Techniques to Provide Greater Transparency to Crude Oil Transportation TankFlow provides subscribers with a nuanced, never-before-seen view into the

Mid-Continent crude oil supply chain.

Ryan Saxton, Oil Transportation Manager

MARCH 2019

The Basin-Duncan Offtake Point

The Duncan, OK, station along Plains All American’s 550,000 bpd Wichita Falls, TX,-to-Oklahoma Basin pipeline began

operations around 2006. At the station, two 120,000-bbl crude oil storage tanks are used to divert crude from the Basin

pipeline to CVR Refining’s 70,000 bpd Wynnewood, OK, refinery, but these volumes are not typically reported to any

state or federal agency. Using TankFlow, Genscape tracks the diversion of crude on a real-time basis, providing critical

visibility into a key micro balance in the Mid-Continent region. The decline coincides with the refinery sourcing more

South Central Oklahoma Oil Province (SCOOP) play crude from the Velocity Midstream Partners system, according to

CVR’s Q3 2018 earnings call in October 2018. Using TankFlow, Genscape subscribers would have observed this shift

months in advance.

The Pony Express-Ponca City Offtake Point

Tallgrass Energy’s 320,000 bpd Guernsey, WY, to Cushing Pony Express pipeline historically facilitated the transportation

of crude from the Bakken, Denver Julesburg, and Powder River plays directly to Cushing. As of January 2018, the pipeline

can divert crude to three separate refineries: Phillips 66 Ponca City, OK (203,000 bpd), Holly Frontier El Dorado, KS

(138,000 bpd), and CHS McPherson, KS (86,000 bpd). The pipeline’s Ponca City connection, which, along with El Dorado,

is monitored by Genscape via TankFlow, can divert up to 100,000 bpd from the Pony Express mainline. Genscape monitors

how much crude is siphoned at the refinery, thereby not reaching Cushing.

Genscape Adds Image Processing and Machine Learning Techniques to Provide Greater Transparency to Crude Oil Transportation

Basin-Duncan Offtake (bpd)

Figure 1: CVR Refining’s Wynnewood, OK, refinery began sourcing less from the Duncan station in late 2018. Source: Genscape TankFlow

The Wynnewood refinery begins sourcing more volume from Oklahoma's SCOOP play.

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2ANALYST INSIGHT SERIES MARCH 2019

ANALYST INSIGHT SERIES

TankFlow also identifies displacement of other sources of feedstock. For example, in mid-2018, Genscape observed an

increase in Permian crude sourced from Phillips 66’s Wichita Falls-to-Ponca City, OK, Mainline to Phillips 66’s Ponca City

refinery. The pipeline averaged almost 18,000 bpd in July 2018, after not shipping a single barrel the month before. At the

same time, the refinery began sourcing less from Pony Express, as the WTI-Midland/WTI-Cushing differential approached

$17/bbl, thereby incentivizing the purchase of Permian crude over other slates.

We observed a similar dynamic in November 2018, when the refinery increased its feedstock from the OK Mainline by more

than 140 percent in response to an influx of Permian crude hitting the Wichita Falls terminal. In November 2018, Plains’

500,000 bpd Sunrise Expansion pipeline, which terminates at Wichita Falls, become operational. Phillips 66’s OK Mainline,

which originates at Wichita Falls, is just one of the Wichita Falls outlets to absorb the additional 250,000 bpd of feedstock

from the Sunrise Expansion pipeline.

The Basin-Lindsay Injection Point

Oklahoma production is expected to increase to more than 620,000 bpd by June 2019, up from 450,000 bpd just two

years earlier, according to Genscape’s U.S. Crude Production Forecast. Oklahoma’s SCOOP and Sooner Trend, Anadarko,

Canadian and Kingfisher (STACK) plays, one of the engines of that growth, has expanded its crude transportation

infrastructure required to get that crude to market. The Lindsay Station, now monitored by Genscape, is a prime example.

In 2014, as Oklahoma crude production surpassed 400,000 bpd, Plains built two 120,000-bbl crude oil storage tanks at

the Lindsay Station in northwestern Garvin County, OK. The station is linked to Velocity Midstream’s SCOOP and Merge

oil infrastructure assets. With the capacity to inject approximately 80,000 bpd of SCOOP crude into the Basin pipeline for

delivery to Cushing, the Lindsay Station quickly became a key connection point for Oklahoma producers and shippers.

Pony Express - Ponca City Offtake vs. Phillips Oklahoma Mainline (bpd)

Figure 2: Crude displacement occurred between the Pony Express and Oklahoma Mainline pipelines from July and November 2018. Source: Genscape TankFlow, TxRRC

Crude diverted to Phillips' Ponca City refinery from Pony Express

Crude from the Ponca City offtake is

displaced by Permian crude from Phillips' OK Mainline

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Pony Express - Ponca City Offtake (Genscape) Phillips OK Mainline (TxRRC)

3ANALYST INSIGHT SERIES MARCH 2019

© Copyright 2019, Genscape Incorporated. All rights reserved.

Until now, injections at the Lindsey Station were a complete unknown. With Genscape’s new visibility into injected volumes,

subscribers can gain insight and transparency into the overall Cushing balance.

As operators continue to expand on existing crude oil

transportation networks, traders, shippers, analysts,

and other market participants need more transparency

into the Mid-Continent crude balance and the micro

balances that comprise it. The image to the right

displays a detailed map of the Cushing pipeline and

refinery connectivity. The rise of Oklahoma production

will bring new feeder and takeaway locations.

Genscape is committed to expanding our sensor

network to provide the monitoring and analysis needed

to understand the Mid-Continent crude balance.

Basin vs. Lindsay Station Injection (bpd)

Figure 3: Plains’ Basin mainline shuts down as the Lindsay station injects SCOOP crude for delivery to Cushing. Source: Genscape TankFlow

The Basin pipeline shuts as injection at the Lindsay station in Oklahoma

ramped up.

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