PermiCon

Right now, pipeline capacity out of the Permian is constrained, and consequently some producers have cut back on well completions, more gas is getting flared, and ethane recovery is being driven more by bottlenecks than by gas plant economics.  But even with these issues, there are still 487 rigs drilling for oil in the basin (according to Baker Hughes), and all will come along with sizable quantities of natural gas.    Not only does this production need to be moved out of the Permian, the volumes need to find a home — either in the domestic market or overseas. These were all issues that were considered by our speakers, panelists and RBN analysts last month at PermiCon, our industry conference designed to bridge the gap between fundamentals analysis and boots-on-the-ground market intelligence.  In today’s blog, we continue our review of some of the key points discussed during the conference proceedings.

Permian oil and gas production may have slammed up against capacity constraints, but that does not mean production growth has ground to a halt. Far from it. In the past 10 weeks, Permian gas production is up another 8% — a gain of almost 700 MMcf/d. Crude production now tops 3.5 MMb/d, with incremental barrels finding their way to market via truck, rail and new pipeline capacity — soon including Plains All American’s new Sunrise project, which will move more Permian crude toward the hub in Cushing, OK. Record-setting volumes of NGLs are streaming their way out of the Permian to Mont Belvieu. This market is moving so fast that if you blink, you’ll miss something important. So to get caught up with all things Permian, last week RBN hosted PermiCon, an industry conference designed to bridge the gap between fundamentals analysis and boots-on-the-ground market intelligence. We think PermiCon accomplished that goal, and in today’s blog, we summarize a few of the key points discussed during the conference proceedings.

China exceeded Canada as the largest buyer of U.S. crude exports for the first time in February 2017 and in year-to-date 2018 has averaged 378 Mb/d versus Canada’s 347 Mb/d. Ramping up purchases from virtually nothing in 2015 to more than 500 Mb/d in June 2018 was no small feat — the logistics in getting that much oil across the world include multiple ship-to-ship transfers, several weeks at sea and a whole lot of negotiating between U.S. crude marketers and the major Chinese buyers: Unipec and PetroChina. That already complicated process has recently been made just a little more complicated by the escalating trade war rhetoric between the U.S. and China. In today’s blog, which launches our new Crude Voyager service, we explain how crude flows to China are evolving.

It seems like everyone wants production out of the Permian these days — at least everyone who works for a pipeline company. The addition of five major greenfield crude oil pipes plus a host of expansion projects could bring Permian takeaway capacity up to 8.0 MMb/d from only 3.3 MMb/d today, with almost all of the incremental barrels destined for export markets. It’s a similar story for natural gas, with seven new pipes in the works to bring 2.0 Bcf/d each to Corpus Christi, Houston, or Louisiana, again with most of the molecules targeting exports. Not to be left behind, at least 27 new Permian gas processing plants are in development, and five new pipeline projects could bring 1.6 MMb/d of y-grade NGLs to the Gulf Coast. It’s a darned good thing that everyone in the global energy markets wants all that Permian production, right? What will this mean for the Permian and, for that matter, for the rest of the U.S. and the world? The only way to answer that question is to get the major players together under one roof and figure it out. That’s the plan for PermiCon 2018. Warning! Today’s blog is a not-so-subliminal advertorial for our upcoming conference.

There has never been anything like the 2018 Permian Basin. In just five years, oil production has tripled, gas production has doubled and NGL output is up about 2.5 times. Crude oil pipelines out of the Permian are filled to the brim and the differentials between crude in Midland and both the Gulf Coast and Cushing have blown out. It is the same for natural gas, with pipe capacity nearly maxed out and basis wide. So far, most Permian NGLs have avoided a similar traffic jam in the local market, only to run into constraints downstream. But the overall Permian market is headed for a breakout! Massive infrastructure development is coming to the basin and the takeaway capacity constraints will be history — at least for a while. What will this mean for the Permian market, and for that matter, for markets across North America and the globe? Clearly, we need to get the major players together under one roof and figure it out. And that’s just the plan for PermiCon 2018. Our goal for this unique conference is to bridge the gap between fundamentals analysis and boots-on-the-ground market intelligence. Warning! Today’s blog is an unabashed advertorial for our upcoming conference.