Daily Energy Blog

Permian producers and shippers want to be able to transport their crude oil to whichever destination will give them the best netbacks. But that’s a moving target, so what they really need is destination optionality — something they can only get if the gathering systems and shuttle pipelines that move oil from the lease tie into multiple takeaway pipelines with different end-points like Houston, Corpus Christi and Cushing. Midstream companies are clamoring to meet that need by expanding existing shuttle pipelines and building new ones. Today, we continue our review of intra-Permian shuttle pipelines.

Expectations of continued production growth in the Permian’s Delaware Basin — and the need to provide crude oil producers and shippers with multiple connections to takeaway pipelines out of the play — are spurring the expansion of existing shuttle pipelines and the development of new ones. A number of these shuttle pipes are part of larger gathering-and-shuttle systems whose pipe diameters increase as they move crude downstream toward takeaway interconnections. Today, we continue our review of intra-basin pipelines that transport oil to takeaway pipes and provide destination optionality in the process.

Shuttle pipelines in the Permian provide high-volume, straight-shot links between crude oil gathering systems and multiple takeaway pipelines out of the play ­­— giving producers and shippers critically important destination optionality. Assuming the shuttles are well-positioned and tied to increasing production on one end and multiple takeaway pipes on the other, existing intra-basin shuttles are highly valued and being gobbled up by major midstream players. And to keep pace with Permian production growth, existing shuttle systems are being expanded and new ones are being planned. Today, we continue our review of key crude-related infrastructure in the nation’s hottest oil production region.

There’s a fierce battle on to build new intra-basin pipelines in the Permian to transport crude oil from gathering systems in hot new production areas to takeaway pipelines out of the play — and to give producers and shippers destination optionality in the process. Participants better bring their A game, though, because successfully developing “shuttle” pipelines in the Permian requires a keen understanding of what’s happening on the field and how best to move the ball forward. Three key factors are lining up producer commitments, providing that critical takeaway optionality, and minimizing the total cost of moving crude from the lease to the Gulf Coast, Cushing or other destinations. Today, we begin a blog series on existing and planned intra-basin oil pipelines in the Permian — what drives the development of these in-demand pipeline “legs” and what it takes for them to succeed.