May 21, 2018 – 24/7 Wall Street
Crude Oil Pipeline Capacity Out of the Permian Basin Is Vanishing
By Paul Ausick
West Texas Intermediate (WTI) crude oil traded at a discount of $7 a barrel to Brent crude late Monday morning, but that reflects just one headwind faced by U.S. crude producers. In the Permian Basin, the discount may surpass $20 or more a barrel due to a lack of pipeline takeaway capacity to transport the oil to Houston or Corpus Christi, where it can be loaded on a tanker for export…
Read the full article here: https://247wallst.com/energy-business/2018/05/21/crude-oil-pipeline-capacity-out-of-the-permian-basin-is-vanishing/
…Further complicating the transportation issue is what producers will do with the associated natural gas that is released by drilling for oil. Some is being transported to out of the Permian Basin to other pipelines or processing plants, but some is also being flared (burned off) because there is not enough natural gas pipeline capacity to transport the gas. Barring a permit from the Texas Railroad Commission, the body that regulates energy production in the state, drilling may have to be curtailed once the flaring limit is reached.
Producers and pipeline operators are getting creative, according to a report this morning from RBN Energy:
Is there an idle refined-products pipe that could be put back into service? Could drag-reducing agents be added to an existing crude pipeline to boost its throughput? How quickly could that mothballed crude-by-rail terminal be restarted?
