April 5, 2018 – Reuters
Texas oil output surge clogs pipelines, depresses prices
By: Devika Krishna Kumar
NEW YORK (Reuters) - The Permian basin in Texas is leading the way as U.S. oil production has reached an all-time high, but the prolific output is causing bottlenecks as pipelines transporting the crude have filled up more quickly than expected.
That has depressed prices there, posing a threat to future production, while providing a boost to pipeline companies as the lines have filled to near-capacity.
With few new pipeline projects scheduled for this year, producers may be forced to slow drilling, or even shut in active production.
The problem illustrates the snags that can arise in transporting crude to the U.S. Gulf Coast as oil prices have rebounded to more than $60 a barrel and companies have reduced costs to make drilling more profitable in the Permian.
Production there is estimated to have hit a record 3.08 million bpd in March, nearly a third of overall U.S. production of 10.4 million bpd, according to the Energy Information Administration (EIA). Permian drillers are branching out into relatively less-profitable areas of the region, said John Zanner, energy analyst for RBN Energy.
“As these fringe areas begin to get exploited, we are seeing more and more crude that needs to find a pipeline to Cushing or the Gulf Coast,” he said…
Read the full article here: https://www.reuters.com/article/us-usa-oil-record-texaspipelines/texas-oil-output-surge-clogs-pipelines-depresses-prices-idUSKCN1HC2L0
