Permian infrastructure buildout
Amid concerns over Permian pipeline takeaway capacity, several pipeline projects have been announced or have come online recently to accommodate rising Permian production.
Recently announced pipeline projects
In December 2017, Phillips 66 (PSX) and Enbridge (ENB) announced an open season for the Gray Oak Pipeline, which is expected to transport crude oil from the Permian Basin to destination markets such as Corpus Christi, Freeport, and Houston, Texas. The pipeline is expected to have an initial capacity of 385,000 barrels per day.
EPIC Eagle Ford Permian Ingleside and Corpus Christi crude oil pipeline is due for startup by the fourth quarter of 2018 and has increased capacity in the line to 675,000 barrels per day from 590,000 barrels per day. This figure could increase further to 825,000 barrels per day. The company has already secured 75,000 bpd (barrels per day) and 100,000 bpd of capacity, respectively, from Apache Corporation (APA) and Noble Energy (NBL).
Plains All American Pipeline’s (PAA) 585 Mbpd Cactus II Pipeline is expected to be in service in the third quarter of 2019.
Energy Transfer Partners (ETP) is building a crude pipeline from the Midland region in the Permian Basin to Nederland, Texas, on the US Gulf Coast. The pipeline is expected to come online in 2020. The company is also the operator of the Permian Express 3 pipeline and could add another 200,000 bpd of throughput by the year’s end.
On the natural gas side of the equation, the 2.0 Bcfpd (billion cubic feet per day) Gulf Coast Express Pipeline operated by Kinder Morgan (KMI) is expected to come online in October 2019. Sempra Energy (SRE) and Boardwalk Pipeline Partners (BWP) Permian-Katy Pipeline, which is proposed to transport up to 2.3 Bcfpd, is expected to come online in the fourth quarter of 2020 or the first quarter of 2021.
Increasing takeaway capacity may, therefore, incentivize Permian producers to drill in the Permian Basin amid a backdrop of increasing crude oil prices.
In the next article, we’ll discuss the U.S. Energy Information Administration’s crude oil price forecasts.