It’s no secret by now that Permian oil markets have struggled over the last two years as nagging takeaway-pipeline constraints put a damper on production growth and, at times, hammered pricing in the basin. Like the Houston Astros’ opponents in the AL West, though, the days are numbered now for Permian oil market constraints, as two new large-diameter pipelines from West Texas to Corpus Christi will be in-service by the end of the month. One of those pipes, Plains All American’s Cactus II, is set to enter service this week. Today, we assess the potential implications of the latest Permian long-haul pipeline expansion, and introduce RBN’s new weekly publication, Crude Oil Permian!
The Permian is on everyone’s mind. For a few years now, it’s been the global epicenter of crude oil production growth — the Permian’s output now tops 4 MMb/d — and we’ve been covering it from almost every angle. Among other things, we’ve looked at crude gathering systems in both the Midland and Delaware basins (see our Have It All series for more). We also considered long-haul expansions and the potential snags that can crop up during the start of pipeline operations in Easy To Be Hard. And just last week, we reviewed Plains All American’s most recent expansion — the Sunrise II Pipeline from Midland to Wichita Falls, TX — in I Can See Clearly Now. Today, we spend some time looking at how Permian oil flowing on the new Cactus II pipeline will access downstream takeaway pipelines and infrastructure near Corpus Christi.
Cactus II (dark-green line in Figure 1) consists of 575 miles of new 26-inch-diameter pipeline and extends from McCamey, TX, in the southern Midland Basin to delivery points near Corpus Christi. Note that Cactus II can also access the oil hub at Wink, TX, in the Delaware Basin via a capacity lease on another Plains-operated pipeline. Also, while Cactus II closely follows the route of Plains’ original Cactus Pipeline (light-green line), the two pipelines do not share facilities. From the Permian, Cactus II extends southeast toward the Texas Gulf Coast and has been completed to Ingleside, TX, which is just across the bay from Corpus Christi. Plains confirmed last week that Cactus II is in the process of taking linefill in preparation for entering commercial service this week. Plains is also working to complete a final segment of Cactus II (dashed lime-green line) that will run from Taft, TX, to delivery points across the water from Ingleside along the Corpus Christi Ship Channel. This segment is expected to be completed by the end of the first quarter of 2020.