Reuters - U.S. oil projects begin to falter as producers curb spending

March 26, 2019 – Reuters

U.S. oil projects begin to falter as producers curb spending

By Collin Eaton, Devika Krishna Kumar and Laila Kearney

HOUSTON (Reuters) - The number of pipeline and storage terminal projects proposed to move shale to the U.S. Gulf Coast has dwindled amid steps by oil producers to pare exploration spending…

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… Last year, booming West Texas production overwhelmed existing pipelines out of the region, sinking local prices and helping launch nine projects proposing to add 5.4 million barrels per day (bpd) through the first half of 2021.

On Monday, Magellan Midstream Partners LP cut its capital spending outlook by $450 million over two years, saying the proposed Permian Gulf Coast pipeline was unlikely to proceed.

The project, proposed with partners including Delek US Holdings Inc, would have carried up to 1 million barrels per day (bpd) to the Gulf Coast. Its proposed mid-2020 start lagged behind other projects and as shale producers pare drilling outlays. Delek on Monday also shifted its stance on the joint venture, deleting a reference to the venture in an investor presentation.

“A winnowing process of sorts has been occurring, with some projects advancing and others falling to the wayside,” said John Zanner, an analyst at consultancy RBN Energy, in a blog post this week.