October 9, 2019 – Freight Waves
Beyond Stevens, a report lays out tough times for drivers operating in Permian Basin
By John Kingston
As the tanker division of Stevens Transport announced its closing this week, an analysis of the situation on the ground in the Permian Basin for trucks suggested things could get a lot worse.
While the statements from Stevens said that a loss of business hauling frac sand was a major reason for the division’s closure next week, an analysis from RBN Energy said it is the pending completion of a significant amount of pipeline capacity in the region that will further squeeze drivers who work the oil patch of the Permian Basin, centered in the Midland/Odessa region of Texas but spreading across the New Mexico line.
According to the RBN analysis, spreads between crude oil delivered into the Midland/Odessa region and the West Texas Intermediate at Cushing, Oklahoma have been narrowing following the completion of new pipelines in the region. Not only have they been narrowing; the two key prices have crossed, with crude in Midland now priced higher than that at Cushing, as the chart below using data from S&P Global Platts shows. […]
[…] And although it was a decline in frac sand hauling cited as a key reason for the demise of Stevens’ oil division, the RBN report cautions that other opportunities will remain. “The good news for the trucking industry is that upstream operations still need trucks to haul frac sand, water used in hydraulic fracturing, and produced water generated when wells are producing crude and associated gas.” the report said. “So, the drivers that showed up in the Permian during the trucking boom times may have a chance to drive products other than crude oil around the region.”
The recent high in drilling activity in the Permian, according to the Baker Hughes rig count, was 493 rigs in November of last year. Its most recent number was 415. Those trucking jobs the RBN report refers to already were challenged; just ask Stevens Transport. The new pipelines are clearly making those challenges greater.