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Researched by Industrial Info Resources (Sugar Land, Texas)--The Permian Basin of Texas and New Mexico is the most prolific oil-producing region in the U.S. According the U.S. Energy Information Administration's latest Drilling Productivity Report, the Permian region is on track to produce 4.12 million barrels per day (BBL/d) in May, which is set to further increase in June. However, there's a catch to all of this production: a lack of takeaway capacity, which has pushed down the price of the region's oil. Jesus Davis, Industrial Info's vice president of research for Oil & Gas, said, "Permian producers are holding their breath for pipelines to start up. Midland crude is currently trading at a discount because of a lack of pipelines. We're going to see two come online fairly soon that will help narrow this discount." Among those constructing Permian pipelines is EPIC Midstream Holdings LP (San Antonio, Texas).
EPIC is actually constructing two pipelines out of the Permian: one which will transport natural gas liquids (NGL) and the other to move crude oil. Construction on the NGL pipeline began first, kicking off last summer. However, in October, EPIC, seeing the potential in carrying crude oil from the region, made the decision to convert part of the pipeline, from Crane, Texas, to Corpus Christi, Texas, to carry crude. Davis said, "The fact that EPIC is changing plans and investing money to convert the pipeline shows how crucial it is to begin getting more oil out of the Permian." The line will have a capacity of 400,000 BBL/d and is expected to go into service in third-quarter 2019. For more information, see Industrial Info's project report.
However, what Permian producers really have their eyes on is EPIC's designated crude oil line, which will run alongside the NGL pipeline for most of the route. The pipeline also will move oil from the Eagle Ford area to the Port of Corpus Christi. The project includes several terminals along the route. This pipeline will carry 600,000 BBL/d and is expandable up to 900,000 BBL/d.
EPIC had initially targeted a third-quarter startup date for this pipeline; however, regulatory issues delayed the start date of the pipeline. In October 2018, EPIC filed a petition with the U.S. Federal Energy Regulatory Commission (FERC), asking FERC's approval within about 90 days that would allow the company to begin setting shipping rates on the pipeline. However, the targeted January decision date came and went, with no sign of FERC taking action, although by that time, EPIC already had committed shippers on the line, regardless of rates.
It wasn't until April that FERC finally approved the rate structure and terms of service for the pipeline. Committed shippers include Noble Energy Incorporated (NYSE:NBL) (Houston, Texas), Apache Corporation (NYSE:APA) (Houston) and Diamondback Energy (NASDAQ:FANG) (Midland, Texas). In a company press release, EPIC said it will leave 10% of the pipeline's capacity for uncommitted shippers. The pipeline is expected to enter service very early in 2020. Along with terminals and pump stations, the pipeline has an overall total investment value of $1.55 billion. For more information, see Industrial Info's project reports on spreads 1 and 3, Spread 2, and spreads 4 and 5. Click here for a full list of related projects, including terminals and pump stations.
Davis said the other pipeline planned to come online to carry crude from the Permian Basin is Plains All American Pipeline LP's (NYSE:PAA) (Houston) Cactus II Pipeline, which also will run to the Corpus Christi area, carrying 585,000 BBL/d of crude. Plains All American is targeting a partial in-service date of third-quarter 2019 and full service in first-quarter 2020. For more information, see Industrial Info's project reports on the Wink-McCamey segment and McCamey-Ingleside/Corpus Christi segment and May 9, 2019, article - Plains All American Getting Oil to Gulf Coast.
Davis said, "Together, these pipelines are essential for the Permian if oil production is expected to increase in the region."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
EPIC is actually constructing two pipelines out of the Permian: one which will transport natural gas liquids (NGL) and the other to move crude oil. Construction on the NGL pipeline began first, kicking off last summer. However, in October, EPIC, seeing the potential in carrying crude oil from the region, made the decision to convert part of the pipeline, from Crane, Texas, to Corpus Christi, Texas, to carry crude. Davis said, "The fact that EPIC is changing plans and investing money to convert the pipeline shows how crucial it is to begin getting more oil out of the Permian." The line will have a capacity of 400,000 BBL/d and is expected to go into service in third-quarter 2019. For more information, see Industrial Info's project report.
However, what Permian producers really have their eyes on is EPIC's designated crude oil line, which will run alongside the NGL pipeline for most of the route. The pipeline also will move oil from the Eagle Ford area to the Port of Corpus Christi. The project includes several terminals along the route. This pipeline will carry 600,000 BBL/d and is expandable up to 900,000 BBL/d.
EPIC had initially targeted a third-quarter startup date for this pipeline; however, regulatory issues delayed the start date of the pipeline. In October 2018, EPIC filed a petition with the U.S. Federal Energy Regulatory Commission (FERC), asking FERC's approval within about 90 days that would allow the company to begin setting shipping rates on the pipeline. However, the targeted January decision date came and went, with no sign of FERC taking action, although by that time, EPIC already had committed shippers on the line, regardless of rates.
It wasn't until April that FERC finally approved the rate structure and terms of service for the pipeline. Committed shippers include Noble Energy Incorporated (NYSE:NBL) (Houston, Texas), Apache Corporation (NYSE:APA) (Houston) and Diamondback Energy (NASDAQ:FANG) (Midland, Texas). In a company press release, EPIC said it will leave 10% of the pipeline's capacity for uncommitted shippers. The pipeline is expected to enter service very early in 2020. Along with terminals and pump stations, the pipeline has an overall total investment value of $1.55 billion. For more information, see Industrial Info's project reports on spreads 1 and 3, Spread 2, and spreads 4 and 5. Click here for a full list of related projects, including terminals and pump stations.
Davis said the other pipeline planned to come online to carry crude from the Permian Basin is Plains All American Pipeline LP's (NYSE:PAA) (Houston) Cactus II Pipeline, which also will run to the Corpus Christi area, carrying 585,000 BBL/d of crude. Plains All American is targeting a partial in-service date of third-quarter 2019 and full service in first-quarter 2020. For more information, see Industrial Info's project reports on the Wink-McCamey segment and McCamey-Ingleside/Corpus Christi segment and May 9, 2019, article - Plains All American Getting Oil to Gulf Coast.
Davis said, "Together, these pipelines are essential for the Permian if oil production is expected to increase in the region."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
