Petroleum Economist - Permian pipelines bring relief—and challenges

August 23, 2019 – Petroleum Economist

Permian pipelines bring relief—and challenges

By Anna Kachkova

Two major new crude pipelines out of the Permian Basin entered service this month, but while this provides some relief to producers, it shifts the congestion to the Gulf Coast

Permian Basin producers should see some relief from the takeaway capacity crunch that has helped constrain crude output growth in the region since last year. From the beginning of August, two out of three major oil pipeline projects scheduled for start-up in the second half of 2019 have entered service…

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…"There is a big risk in the basin right now that there could be a massive overbuild," says John Zanner, an analyst at fundamentals analysis firm RBN Energy. Under a scenario where crude prices remain at around $55/bl until 2024, he says, it would be tough to argue the case for both the planned Wink-to-Webster and Midland-to-ECHO 3 pipelines to be built. "I think it is probably more likely that Wink-to-Webster or Midland-to-ECHO 3 falls off the line and never gets built out," says Zanner…