Long-Haul Pipelines Scarce, O&G Midstream Focuses on Storage

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Researched by Industrial Info Resources (Sugar Land, Texas)--Midstream companies are understandably skittish about announcing big projects, despite crude oil's recent uptick in commodity price. As such, what long-haul pipelines were already permitted when crude prices fell started getting built, and others in earlier stages have been pushed back. Between now and spring 2017, only the 200,000 BBL/d Diamond pipeline by Plains All American LP (NYSE PAA) (Houston, Texas) is slated to kick off, according to Industrial Info's data on inter-regional pipelines. By contrast, however, new crude oil storage projects are plentiful, with projects representing over 21 million barrels (MMBBL) of storage across 18 distinct projects mainly in Texas and Louisiana kicking off in the same time period. In total, Industrial Info is looking at $7.1 billion of investment in crude, condensate and bitumen terminal capital projects in the U.S. and Canada, $1.4 billion of which is under construction already and $672 million with approvals in hand getting ready to start work. These represent opportunities for contractors to pursue in the short term while waiting for the market to right itself.

Since the shale boom, pipeline connectivity has grown in a similar way spurred on by producers wishing to get their products to market via the cheapest possible method, pipeline. As it stands, each play in North America is oversupplied with takeaway capacity, including both pipelines as well as crude by rail. Thus with production gradually falling across each of the major plays, it's no surprise that immediate demand for new inter-regional pipeline capacity is low. With commodity prices being low, buying and holding until the price improves is the name of the game. Thus it follows that right now the market wants storage and interconnectivity to facilitate holding crude before it is sold to consumers, i.e. refineries.

Industrial Info is currently tracking over 103 MMBBL of new storage capacity, representing the $7.1 billion of investment described above. Short term spending is seen most prominently in the Gulf Coast and North Dakota, while later term spending (late spring 2017 and on) is seen mostly in pipe-dependent projects across Canada. There are 24 MMBBL of storage currently under construction with the rest in varying stages of planning, permitting and engineering.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 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 https://www.industrialinfo.com/.