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Why Plains All American Pipeline Is Focused on the Permian Basin

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Apr. 28 2017, Published 3:06 p.m. ET

PAA’s Permian focus

Plains All American Pipeline (PAA) has a significant presence in the Permian Basin, which is expected to have one of the highest growth rates in crude oil production. 

According to the EIA (U.S. Energy Information Administration), the Southwest region is expected to lead the growth in oil production over the next two decades. Growth in the Southwest region should be supported by increased production in the Permian Basin.

The chart above shows the EIA’s reference case crude oil production projections by region. The Permian Basin accounts for more than half of the total onshore rig additions since May 2016. 

According to Plains All American, the high level of investment by upstream companies in the Delaware Basin is indicative of potential drilling activity in the region. The chart below shows rig count change by region from May 2016.

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Permian acquisitions

On April 3, 2017, Plains All American Pipeline closed the acquisition of Advantage Pipeline for $133 million, through a 50-50 joint venture with Noble Midstream Partners (NBLX). The pipeline system includes a crude oil pipeline in the southern Delaware Basin from Reeves County to Crane County and 490,000 barrels of storage capacity.

In January 2017, Plains All American announced an agreement to acquire a crude oil gathering system in the Permian Basin for $1.2 billion. Let’s take a closer look at this system in the next part of this series.

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