June 20, 2018 – Journal of Petroleum Technology
Is the Permian Barreling Toward a Breaking Point?
By: Matt Zborowski
The next year could spell trouble for operators producing oil in West Texas and southeastern New Mexico.
The Permian Basin currently has more crude than it can handle, and production there continues to grow at a steady rate month-over-month after surpassing 3 million B/D earlier this year, according to data from US Energy Information Administration (EIA).
Pipeline takeaway capacity isn’t sufficient and won’t be until the second half of 2019. There aren’t nearly enough trucks or truck drivers to make up the difference, and any meaningful expansion of crude-by-rail transport is restricted by infrastructural- and business-related constraints…
Read the full article here: https://www.spe.org/en/jpt/jpt-article-detail/?art=4321
…Analytics firm RBN Energy notes that the Midland-to-Sealy and BridgeTex pipelines will benefit from drag reducing agents, additives that cut turbulence—an issue for pipelines moving lighter crudes—allowing for better flow and thus increased capacity.
Will There Ever Be Enough Truckers?
An alternative to pipeline for moving some of the excess crude out of the Permian is trucking, but the seemingly flexible mode of transport is becoming more expensive and difficult to secure. Wood Mackenzie estimates that trucking crude from Permian to the Gulf Coast costs $12–14/bbl, which is reflected in the recent differentials. What’s more, there’s a dearth of readily available truck drivers not only in the basin but nationwide, as booming industrial and consumer economies have created demand far exceeding national capacity.
The American Trucking Association in late 2017 projected a national driver shortage of 50,000 by the end of that year, a trend that it believed could balloon by about 350% by 2026. As a result, companies serving the oil and gas industry are competing with companies such as Kellogg’s and General Mills for drivers.
“Driver demand across the US is at an all-time high regardless of industry and convincing guys to come back to the oil patch is an issue,” said John Zanner, fundamental energy analyst at RBN Energy. Within the Permian, as it stands, there aren’t nearly enough trucks or drivers for intra-basin movement of crude, water, sand, and equipment.
