M2 Infrastructure, TransCanada to develop new crude oil storage facility in Oklahoma
M2 Infrastructure, an affiliate of Lone Star Capital, has signed a memorandum of understanding with TransCanada to construct a new crude oil storage facility at the latter's terminal in the US state of Oklahoma.
The construction of the facility, which will have a capacity to store 6.2 million barrels of crude oil, is slated to commence in late 2017.
M2 Infrastructure will own the new crude oil storage facility in Cushing, Oklahoma, while it will be operated by TransCanada.
By partnering with Matrix Global Holdings, the owner of Matrix Markets, M2 Infrastructure intends to sell storage capacity to its customers by conducting on-line auctions of futures contracts with or without physical forward agreements.
M2 Infrastructure and Matrix Global Holdings co-founder and manager J. Robert Collins, Jr. said: “This project’s unique position in Cushing, combined with the innovative excellence of Matrix, should provide the lowest cost, highest throughput, most liquid and most connected storage solution in the midcontinent – eliminating costly limitations of alternative storage programs.”
Cushing, where the new oil storage facility will be built, is considered to be among the world’s most active crude oil trading hubs. It is also known to be the delivery point for the West Texas Intermediate (WTI) futures contract put up on the Chicago Mercantile Exchange (CME).
TransCanada executive vice-president and Liquids Pipelines president Paul Miller said: “TransCanada is committed to developing energy infrastructure solutions in the United States and Canada and pursuing this opportunity fits well in our plans to provide enhanced flexibility to our customers.”
As per the MoU, the innovative storage solutions provider has an option to expand the storage facility to up to 20 million barrels in subsequent phases.
The project and its further expansions will take place after the completion of definitive agreements signed by the parties along with the mandatory approvals and land rights.