Runnin' Down A Dream - EPIC Crude Pipeline Nears Full Utilization

Permian crude oil markets are getting interesting again, with triple-digit prices making daily headlines and boosting producers’ cash flows. But there have been few parties in the Permian oil midstream space. There, excess long-haul capacity has been the story for some time, a situation that became more pronounced when Wink-to-Webster (W2W) — the last of the new greenfield pipelines to the Texas Gulf Coast — started up earlier this year. There’s so much capacity in place that price spreads have remained tight and competition for barrels has been fierce. That said, there’s a positive story flying under the radar in the Permian oil markets. One of the new pipelines that started up out of the Permian in 2019 is now full. That may surprise some folks, kind of like when the Texas A&M Aggies pulled in the #1 football recruiting class in the country earlier this year. While Alabama’s coach is apparently still trying to swallow that news, you’re not likely to find yourself doubting the ability of a newbuild to get full in today’s competitive environment. At least you won’t after we tell you the story of the EPIC Crude Pipeline, which we do in today’s RBN blog.

[RBN’s Crude Oil Permian provides detailed analysis of the fundamental drivers impacting the Permian Basin crude oil market including weekly updates of data, analysis and market intelligence, Permian crude oil supply and demand, pipeline outflows and capacity, prices, and infrastructure updates. Click here for more information and a sample report.]

Crude oil markets are a favorite focus of ours here at RBN and we’ve written extensively on the Permian over the years, both in our daily blog and in our weekly Crude Oil Permian publication. If you follow along, you’ll know that Permian crude production currently sits near 5.2 MMb/d and is expected to grow by about 700 Mb/d during 2022, an expectation that has crept up slightly since our 2022 Permian Outlook blog was written back in January. Despite all that growth in Permian oil production, aggregate pipeline capacity from the basin still far outstrips available barrels. Figure 1 below shows our current outlook for all the pipelines leaving the Permian and heading toward the Houston and Corpus Christi markets. As you can see, though there is plenty of production growth to come, spare capacity is expected to persist for some time.

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