Crude oil output in the Permian Basin is now averaging 6.3 MMb/d, up about 400 Mb/d from year-ago levels and 800 Mb/d from April 2022. The gains — and related increases in associated gas — have spurred a new round of concerns about pipeline exit capacity, complicating drillers’ hopes to boost crude production. In today’s RBN blog, we will discuss the takeaway capacity issue and what it means for producers and pipeline operators, including those planning offshore crude export terminals.
Crude Oil TradeView provides up-to-date data and insights into the behavior of differentials for 33 crude assessments across North America. Each week, it also walks you through the reasoning of why differentials widen, narrow, flip (premium vs. discount), or blow out.
Permian E&Ps want to increase their crude oil production, but they are hemmed in — and at least a tad hesitant. As producers in West Texas and southeastern New Mexico know all too well, crude production growth can only happen if there is sufficient pipeline capacity in place to move not only the oil they extract, but also the massive volumes of associated gas that emerge with it. As we discussed recently in Come Dancing, takeaway capacity for gas is once again at the knife’s edge, and there really are no good alternatives to piping that incremental gas to market — for most producers, flaring at scale is no longer an acceptable. Luckily, there’s at least one gas-takeaway fix in the short-term: The greenfield, 2.5-Bcf/d Matterhorn Express gas pipeline will come online later this year.
But while Matterhorn will help, it’s likely to fill up quickly, meaning even more gas takeaway will be needed to keep crude production growing through the next decade. That may include the expansion of the Gulf Coast Express (GCX) system as well as installing some new pipes (See Come Dancing for our projections of new gas pipe capacity). Assuming that new gas pipeline capacity out of the Permian is added as needed, crude oil production growth in the basin will eventually drive the need for more takeaway capacity, especially to major Gulf Coast oil hubs. That growth could also drive the development of one or more of the new deepwater export terminals being planned off the Texas coast, which could spur additional pipeline capacity to feed those terminals.
Figure 1. Permian Crude Oil Production & Takeaway Capacity, With Midland Differential to NYMEX WTI. Sources: Bloomberg, RBN
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About the song
“Texas Hold ’Em” was written by Beyonce, Elizabeth Lowell Boland, Megan Bulow, Brian Bates, Nathan Ferraro and Raphael Saadiq. It appears as the seventh song on Beyonce’s eighth studio album, Cowboy Carter. Released as a single in February 2024, the song went to #1 on the Billboard Hot 100 and Hot Country Singles charts, making Beyonce the first black woman with a #1 country song in the history of Billboard. Personnel on the record were: Beyonce (vocals), Elizabeth Lowell Boland (piano), Nathan Ferraro (bass, piano), Rhiannon Giddens (banjo, viola), Hit-Boy (synthesizers), Killah B (drums), Raphael Saadiq (drums, bass, keyboards), and Khirye Tyler (keyboards, bass).
Cowboy Carter was recorded between 2019-24 at APG, Dezert Flower, Electric Feel, Kings Landing West, Record Plant, The Sound Factory, and The Village Westlake in Los Angeles; The Cave, East Iris, Dolly P's Studio, and The Library in Nashville; and The Trailor in East Hampton, NY. Produced by Beyonce, 070 Shake, BAH, Jon Batiste, Cadenza, Miley Cirus, D.A. Got That Dope, Derek Dixie, Dixon, Ian Fitchuk, Harry Edwards, Shawn Everett, Nathan Ferraro, Ink, Tyler Johnson, Paul McCartney, No I.D., Nova Way, Dave Hamelin, Killa B, Nick Kobe, Mamii, Simon Martensson, Pharrell Wiliams, Jack Ro, Raphael Saadiq, Sean Solymar, Sounwave, Swizz Beatz, The Dream, and Khirye Tyler, the album was released in March 2024. It went to #1 on the Billboard 200 and Top Country Albums charts. The album is presented as a broadcast on a fictional Texas radio station, with Dolly Parton, Linda Martell and Willie Nelson acting as DJs. Famous guest musicians on the LP include Stevie Wonder, Paul McCartney and Niles Rogers, among others. Three singles have been released from the LP so far.
Beyonce (Beyonce Giselle Knowles-Carter) is an American singer, songwriter, record producer, actress and film director. She is married to hip-hop record mogul Jay-Z. She rose to fame professionally as a member of the successful R&B girl group Destiny’s Child in the late nineties. She released her first solo studio album, Dangerously in Love, in 2003. She has released eight studio albums, five live albums, three compilation albums, one soundtrack album, five EPs and 61 singles. She has sold over 200 million records worldwide. She has won 32 Grammy Awards, seven American Music Awards, and 26 MTV Video Music Awards. She is the recipient of the Billboard Millenium Award and has a star on the Hollywood Walk of Fame. She has starred in 12 motion pictures and 10 concert films. Beyonce continues to record, act and tour.
