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More Pipelines to Get Permian Crude to Market
Posted: 04 May, 2018

More Pipelines to Get Permian Crude to Market

The Permian Basin is expected to add enormous volumes this year, but its pipeline network is filling up fast. Lack of availability on the Permian Basin’s pipeline network is forcing steep discounts for oil and threatening to derail the aggressive growth projections for the region.

The US Energy Information Administration (EIA) predicts the Permian output in April will increase of 80,000 bpd from March to hit 3.156 million barrels per day (mb/d), up 850,000 bpd from a year ago1. There is rapidly shrinking availability of pipelines to get this oil to market. “As these fringe areas begin to get exploited, we are seeing more and more crude that needs to find a pipeline to Cushing or the Gulf Coast,” John Zanner, energy analyst for RBN Energy, told Reuters2.

With few new pipeline projects scheduled for this year, producers may be forced to slow drilling, or even shut in active production.  According to market intelligence from Genscape, pipeline utilization from the Permian to the Gulf Coast averaged about 89 percent this year and 96 percent in the last four weeks.

  1. Cunningham, N. (2018, April 8). Permian Bottleneck Could Impact Global Oil Markets. Retrieved from https://oilprice.com/Energy/Crude-Oil/Permian-Bottleneck-Could-Impact-Global-Oil-Markets.html
  2. Kumar, K. (2018, April 5). Texas oil output surge clogs pipelines, depresses prices. Retrieved from https://www.reuters.com/article/us-usa-oil-record-texaspipelines/texas-oil-output-surge-clogs-pipelines-depresses-prices-idUSKCN1HC2L0