gathering pipelines

U.S. LNG export capacity is poised to grow tremendously over the next few years, mostly near the Texas/Louisiana border. The gas-focused Haynesville Shale in northwestern Louisiana and northeastern Texas is a prime source of additional supply for those new and expanded terminals. But plans for new north-to-south pipelines to deliver incremental gas out of the Haynesville have been clouded by legal challenges. In today’s RBN blog, we’ll discuss the reasons for the disputes, what’s been going on recently, and the potential fallout. 

Though crude oil prices have been rebounding lately, this spring’s price crash sent shockwaves through the U.S. midstream industry, which not too long ago had emerged from a decade of massive infrastructure investment in response to unprecedented upstream production growth. Just as midstreamers were looking forward to steady earnings growth, waves of huge capex cuts and well shut-ins by producers shattered forecasts and shifted strategic instincts toward survival instead of growth. Every company is different, of course, but a lot can be learned by examining a single firm in detail to see how it will fare in the current market environment, given its particular set of assets and arrangements. Take Targa Resources. An analysis of its performance provides insights into the outlook for integrated natural gas and NGL assets, especially in the Permian Basin, as well as the value of forming joint ventures. Today, we preview our Spotlight report on Targa.

Though crude oil prices have been rebounding lately, this spring’s price crash sent shockwaves through the U.S. midstream industry, which had just emerged from a decade of massive infrastructure investment in response to unprecedented upstream production growth. Just as midstreamers were looking forward to steady earnings growth, waves of huge capex cuts and well shut-ins by producers shattered forecasts and shifted strategic instincts toward survival instead of growth. Every company is different, of course, but a lot can be learned by examining a single firm in detail to see how it will fare in the current market environment, given its particular set of assets and arrangements. Take Targa Resources. An analysis of its performance provides insights into the outlook for integrated natural gas and NGL assets, especially in the Permian Basin, as well as the value of forming joint ventures. Today, we preview our new Spotlight report on Targa.

The Bakken Shale is being hit especially hard by production cuts this spring. Crude oil-focused producers large and small have been shutting in wells and putting well completions on hold, slashing daily crude output by more than one-sixth. The rig count is down by half in less than two months — to 26, the play’s lowest level since mid-2016 — and thousands of oilfield workers have been let go. All this is happening despite the facts that the Bakken’s four-county core has some of the best shale assets outside the Permian and that in 2017-19 the play was super-hot, with crude production increasing by 50%. That three-year growth spurt spurred the development of a number of new crude gathering systems, many of which now face a period of significant underutilization. Today, we discuss highlights from our new Drill Down report on oil production and supporting infrastructure in the U.S.’s #2 shale play.

The Permian Basin has attracted more than its share of midstream start-up companies over the past few years, and for good reason. The region has experienced big gains in crude oil, natural gas and NGL production, and that’s put stress on the Permian’s already significant pipeline infrastructure and spurred the development of many new projects. One new midstreamer that’s made a big splash is Lotus Midstream, which, since it was formed in early 2018, has partnered with some of the Permian’s biggest players — including ExxonMobil and Plains All American — to advance the now-sanctioned 1.5-MMb/d Wink-to-Webster crude pipeline. It’s also acquired Occidental Petroleum’s (Oxy) Centurion pipeline system, which includes a lot of crude gathering pipe and is one of the two main takeaway links between the Permian and the Cushing, OK, hub. What’s Lotus up to, and how is it shaping Permian crude transportation? Today, we examine what has quickly become one of the largest midstreamers in the U.S.’s hottest shale play.

There’s a fierce battle on to build new intra-basin pipelines in the Permian to transport crude oil from gathering systems in hot new production areas to takeaway pipelines out of the play — and to give producers and shippers destination optionality in the process. Participants better bring their A game, though, because successfully developing “shuttle” pipelines in the Permian requires a keen understanding of what’s happening on the field and how best to move the ball forward. Three key factors are lining up producer commitments, providing that critical takeaway optionality, and minimizing the total cost of moving crude from the lease to the Gulf Coast, Cushing or other destinations. Today, we begin a blog series on existing and planned intra-basin oil pipelines in the Permian — what drives the development of these in-demand pipeline “legs” and what it takes for them to succeed.