June 4, 2019 – Forbes
Threats To Shale's Strength Lurk Under the Surface
By Dan Eberhart
Oil production from the US shale sector continues to accelerate at a record pace, but a host of threats lurking beneath the surface could put the brakes on the industry’s growth this year.
Despite investor demand for capital discipline and higher returns, the shale sector’s financial performance has been spotty – a problem made worse by falling prices. A barrel of US benchmark West Texas Intermediate (WTI) crude ended Wednesday at $51.24 a barrel, down nearly 20% from its late April high.
The market is officially in bear territory despite some very bullish indicators.…
Read the full article here: https://www.forbes.com/sites/daneberhart/2019/06/13/threats-to-shales-strength-lurk-under-the-surface/#73adbad42c10
… In traditional oil-producing states – Texas, Louisiana and Oklahoma, for example – this is less of a problem. A number of new oil pipelines are expected to come online in the West Texas Permian after 2021 to ease bottlenecks and firm up price differentials with international markets. But that’s two years away and production continues to rise.
Construction of pipelines for natural gas are even less certain. Permian gas production currently is about 10 billion cubic feet per day, for which there is already insufficient takeaway capacity. But a number of shale projects are in the works that could add 4.3 million barrels a day of Permian oil production before 2021. RBN Energy estimates these same projects will more than double the region’s gas output to 23 billion cubic feet a day.
At the same time, only one new pipeline, the Gulf Coast Express with a capacity of 2 billion cubic feet a day, is slated to come online in the Permian this fall. Another half dozen pipelines are proposed, but only two look certain to be built. The gas market will look more favorable to pipeline companies when the second wave of LNG projects advance, providing greater market access for exports. In the meantime, the venting and flaring will continue.
