Help On The Way - When Will the Permian Need New Gas Takeaway Capacity?

Natural gas production from the Permian Basin is expected to grow considerably over the next several years, taxing existing takeaway capacity. Nearly 8.0 Bcf/d of takeaway capacity expansions are proposed to help address impending transportation constraints from the region. When will new pipeline capacity be needed and will it be built in time to avert constraints? In today’s blog, we assess the timing of potential constraints based on production growth, existing takeaway capacity and potential future capacity additions.

This is Part 4 of our series on emerging takeaway constraints in the Permian and the pipeline projects planned to alleviate them. We started in Part 1 of this series with a look at the factors behind the increasingly tight transportation capacity out of the region, namely rapidly rising crude oil and liquids-rich associated gas production from the basin. Given that breakeven costs in the Permian are some of the lowest in the country, production is expected to only grow from here. In anticipation of rising supply from the region, there are numerous crude and gas takeaway projects that are proposed to be built, with the bulk of the new capacity targeting completion in the 2019-20 time frame. On the oil side, there is about 550 Mb/d of oil takeaway capacity due online in early to mid-2018 — 450 Mb/d from Enterprise Product Partners’ Midland-to-Sealy Pipeline and another 100 Mb/d from Phase I of Energy Transfer Partners’ Permian Express III project. After that, EPIC Pipeline is slated to add 550 Mb/d of crude takeaway capacity in first-quarter 2019. Other projects, detailed in Part 1, are also progressing, but as we discussed in Part 2 of this series, uncertainty lingers in the timing of some of these projects, particularly farther out in the timeline,  introducing the risk for constraints prior to new capacity additions coming online.

In Part 3, we turned our focus to the gas side of things, detailing the various takeaway projects jockeying to serve Permian producers, all targeting the LNG and Mexico export markets along the Gulf Coast. There’s Kinder Morgan’s 1.9 Bcf/d Gulf Coast Express (GCX) and NAmerico’s 2.0 Bcf/d Pecos Trail pipelines targeting the Corpus Christi market area; Boardwalk and Sempra’s 1.5-2.0 Bcf/d Permian-Katy Pipeline (P2K) targeting Freeport LNG exports and industrial demand in the Katy/Houston Ship Channel area; and Tellurian’s 2.0 Bcf/d Permian Global Access Pipeline (PGAP) targeting LNG export demand along the Louisiana Gulf Coast. The projects are at various stages of development, with GCX being the furthest along following its final investment decision (FID) last month.

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