There has never been anything like the 2018 Permian Basin. In just five years, oil production has tripled, gas production has doubled and NGL output is up about 2.5 times. Crude oil pipelines out of the Permian are filled to the brim and the differentials between crude in Midland and both the Gulf Coast and Cushing have blown out. It is the same for natural gas, with pipe capacity nearly maxed out and basis wide. So far, most Permian NGLs have avoided a similar traffic jam in the local market, only to run into constraints downstream. But the overall Permian market is headed for a breakout! Massive infrastructure development is coming to the basin and the takeaway capacity constraints will be history — at least for a while. What will this mean for the Permian market, and for that matter, for markets across North America and the globe? Clearly, we need to get the major players together under one roof and figure it out. And that’s just the plan for PermiCon 2018. Our goal for this unique conference is to bridge the gap between fundamentals analysis and boots-on-the-ground market intelligence. Warning! Today’s blog is an unabashed advertorial for our upcoming conference.
Are we overdoing the Permian here in the RBN blogosphere? You might think so. Eight out of our last 10 blogs have either been specifically about the Permian, or made reference to market developments in the basin. But that level of attention is clearly warranted. After all, there are a total of five oil and seven gas pipeline greenfield takeaway projects in the works, plus a host of expansion projects. On the NGL side, 41 new gas processing plants are online, another 25 are in development, and five new pipe projects could provide an additional 1.6 MMb/d of capacity to the Gulf Coast.
It is highly probable that enough of these projects will be completed over the next three years to relieve the capacity constraints looming over the market today and in the near term. But what happens once they’ve come online? Certainly, prices in the Permian will get a big boost. But what about prices in the destination markets that Permian production is targeting — mostly LNG and Mexico exports along the Gulf Coast? Of course, it all depends on where those molecules end up, and how much it costs to get them there. That’s the kind of issue we’ll be addressing at PermiCon.
The idea of our conference is to bring together the views of top executives from Permian producers and midstreamers, along with the latest analysis of Permian production, infrastructure and takeaway capacity from RBN. The conference is slated for one day — Wednesday, October 10, 2018 — at the Royal Sonesta in Houston. That’s near the Galleria.
In seven presentations distributed throughout the day, our analysts will do short, to-the-point presentations on different aspects of Permian market developments, together with RBN forecasts. We’ll cover our production outlook for crude, gas and NGLs, our views on natural gas processing capacity, and — it goes without saying — our projections for pipeline takeaway capacity for all three commodity groups. The whole RBN crew will be there, available for questions, sidebar conversations and general discussion about what we are hearing in the market.