Did you know that production of oil in the Permian is actually increasing by 800,000 barrel per day (BPD) each year? Production has averaged 3.3 million BPD lately. The pipeline capacity is 3.6 million BPD and in just a few months, we’re expected to exceed that in production. Then what?
Until infrastructure is built to keep up with production, some wells will shut down. If the pipeline capacity isn’t there, they have to cut back on production. Some drillers have planned ahead and reserved pipeline space, but it’s still frustrating for many producers. So, pipeline construction is in the works.
Plains All American Pipelines expects the expansions for its Sunrise and Cactus II to be in service next year. That company is also working with super-major ExxonMobil on a large-scale oil pipeline project. That project should ship in excess of 1 million BPD out of the area. That project is expected to be in service by 2021.
Plus, Gray Oak Pipeline from Phillips 66 and Canadian Enbridge should be online next year too. That would carry over 3 million barrels per day from West Texas to near Corpus Christi and Houston.
Additionally, Kinder Morgan teamed up with Apache Corp and a Blackstone subsidiary to construct a natural gas pipeline, which we discussed yesterday.
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