Everybody Wants You - Permian Oil, Gas and NGLs Target Export Markets

It seems like everyone wants production out of the Permian these days — at least everyone who works for a pipeline company. The addition of five major greenfield crude oil pipes plus a host of expansion projects could bring Permian takeaway capacity up to 8.0 MMb/d from only 3.3 MMb/d today, with almost all of the incremental barrels destined for export markets. It’s a similar story for natural gas, with seven new pipes in the works to bring 2.0 Bcf/d each to Corpus Christi, Houston, or Louisiana, again with most of the molecules targeting exports. Not to be left behind, at least 27 new Permian gas processing plants are in development, and five new pipeline projects could bring 1.6 MMb/d of y-grade NGLs to the Gulf Coast. It’s a darned good thing that everyone in the global energy markets wants all that Permian production, right? What will this mean for the Permian and, for that matter, for the rest of the U.S. and the world? The only way to answer that question is to get the major players together under one roof and figure it out. That’s the plan for PermiCon 2018. Warning! Today’s blog is a not-so-subliminal advertorial for our upcoming conference.

The Permian isn’t just a basin. It’s a phenomenon. Over the past five years, the increase in Permian crude oil production has been more than three times the rate of all the rest of the U.S. put together, and the Permian will continue to dominate U.S. production growth. Figure 1 shows that essentially all of the growth in U.S. crude oil production since 2014 (between red dashed and blue dashed vertical lines) has come from the five big shale basins — Eagle Ford, Anadarko (STACK/SCOOP), Niobrara, Bakken and Permian — but that the Permian (orange layer) dwarfs them all. (The area from the top of the Permian to the red line is the sum of all other basins, including the Offshore Gulf of Mexico.) It’s a similar story going forward in RBN’s “Mid-Curve” scenario (shown in area to right of dashed blue vertical line), which assumes a price outlook similar to today’s forward curve. By 2023, Permian production will exceed volumes from all four of the other big shale basins combined.

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