March 3, 2020 – S&P Global Platts
Coronavirus could weigh on US crude exports, supply pipelines, experts say
By Allison Good
With oil producers worldwide eyeing a blunted demand outlook and lower-for-longer prices amid the COVID-19 outbreak, U.S. crude exporters and the midstream companies supporting them could be in for some financial headwinds.
While U.S. crude shipments have steadily risen in recent weeks, a confluence of geopolitical factors will determine whether U.S. shale can continue to export upward of 3 million barrels per day, industry experts said.
"It didn't have much of an impact last week [on crude exports], but arguably that was before all the big concerns took effect," Morningstar Inc.'s director of energy commodities research, Sandy Fielden, said in an interview, noting that he expects to see U.S. producers earmark more oil for storage and less for exports as the virus drives down commodity prices. "That's a pretty good indication that exports are under pressure. The impact of demand destruction then is that [U.S.] crude has to compete more aggressively."
Permian competition may be heading for 'bloodbath'
If demand decreases and oil prices fall enough to require U.S. drillers to pull back, competition for barrels on Permian Basin pipelines supplying Gulf Coast export facilities could turn into a "bloodbath," Fielden said.
Rusty Braziel, president and CEO of RBN Energy, a company that provides consulting and advisory services to the energy industry, agreed in a March 1 blog post that the disconnect between having too much capacity as smaller volumes flow will "only get worse if crude oil prices continue tanking and production flattens or declines just as still more pipes are coming online."
Read the full article here: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/coronavirus-could-weigh-on-us-crude-exports-supply-pipelines-experts-say-57396406
