Permian Boom Jeopardized By Pipeline Troubles

There’s more: a JV between Phillips 66 and Andeavor could make its Gray Oak pipeline ship up to 1 million bpd of crude if it gets sufficient commitments from producers. For now, plans are for a capacity of 700,000 bpd, based on the outcome of a second open season, yet to be announced. Whatever the capacity, the pipeline should be operational by the end of next year.

The EPIC pipeline, capable of shipping 590,000 bpd should also be operational by the end of 2019. Two large Permian players—Apache Corp. and Noble Energy—have already committed future flows taking up 30 percent of the pipeline.

So, that’s 2.45 million bpd in new pipeline capacity coming by the end of 2019. That’s not too bad for producers: it means they will not have to suffer more. And then there is more coming, so by the middle of 2020, there will be as much as 3.1 million bpd of new pipeline capacity in the star of the shale patch. The only potential problem with all this would be if for some reason oil prices plunge deep, leaving this capacity stranded. For now, there is no sign this could happen, so it’s all good news for the Permian drillers.

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