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For a few years now, crude oil shippers out of the Permian — the nation’s leading crude oil play — have enjoyed a surplus in pipeline takeaway capacity thanks to a slew of new pipes that came online just as COVID crushed demand, prices and production. But Permian production has recovered, and the takeaway situation is changing for some routes. For example, the pipelines from West Texas to Corpus Christi are running close to full, and if a new offshore export terminal gets built, Permian-to-Gulf-Coast takeaway dynamics would get far more complicated — and fast.
U.S. crude oil production growth has largely steered pipeline development. Initially, new takeaway capacity targeted Gulf Coast refinery demand, but once that demand got saturated, attention turned to exports. Since the crude export ban to countries other than Canada was lifted in December 2015, shipments from Texas and Louisiana terminals have soared, averaging just under 4 MMb/d in the first half of this year.
That boom was made possible by the massive (not to mention expensive) infrastructure buildout from the Permian and across the Gulf Coast — pipelines, storage and export facilities — and some upgrades to existing assets too.
Key takeaways from the report include:
- Permian pipeline constraints loom as basin’s crude output grows.
- Crude oil flows to Corpus Christi, top export hub, already near limit.
- Deepwater port could bolster Houston’s status as major oil hub.
- Nederland and Beaumont turn focus to NGLs as changes near.
“It Won’t Be Like This for Long” is included in RBN Energy’s 2024 Drill Down report series, a suite of reports covering many of the key issues expected to impact the markets for crude oil, natural gas and natural gas liquids. Drill Down reports are part of RBN Backstage Pass™ premium resources that also include Blog Archive Access, Spotcheck Indicators, Market Fundamentals Webcasts, Get-Togethers and more. By subscribing to RBN’s Backstage Pass™ Premium Services, you plug into our network and get direct access to our premium resources.
