HOUSTON – It may be hard to believe, but there could be a big transportation change coming to the Permian Basin of West Texas/southeast New Mexico.
As crude oil production has doubled in just the last two years, to more than 4 million barrels per day (Mmbpd), the cry from oil producers has been a constant “build more pipelines.”
At the moment, there are no fewer than 14 crude lines exiting the Permian, with capacity totaling 4.16 Mmbpd, according to analytics/consulting/advisory firm RBN Energy.
There’s no wonder the “no mas” sign is out in the Basin – you can’t flow crude in nonexistent lines.
But change is in the air – certainly on the drawing board. Permian Basin infrastructure is shifting from underutilized to potentially overbuilt, according to Jason Ferguson, RBN’s manager, Energy Fundamental Analysis.
Ferguson was addressing an audience of more than 500 at last week’s first EnergyxPortCon conference in Houston. Kallanish Energy was in attendance.
“You will have an overbuilt situation (concerning crude oil takeaway) in Permian, even with the high case price scenario (over $60 per barrel) in place,” Ferguson told the more-than 500 attendees to the first-ever Energy xPortCon conference last week in Houston. Kallanish Energy was in attendance.
While all crude lines out of the Permian are stuffed, between now and 2021, that situation radically changes as projects totaling another 4.3 Mmbpd, flowing across Texas to Nederland, Houston or Corpus Christi, Texas.
There also is a little problem with Permian pipelines flowing associated gas. Ferguson told his EnergyxPortCon audience production stands at roughly 10 billion cubic feet per day – and, there is insufficient pipeline capacity.
Under a base case scenario, RBN/Ferguson said natural gas production would reach roughly 23 Bcf/d. Under a high-case scenario, natural gas production will reach approximately 27 Bcf/d.
“At least six greenfield pipelines have been announced that would leave the Permian,” Ferguson said. “But only two of those lines are a sure thing.”
This post appeared first on Kallanish Energy News.