April 2019, Vol. 246, No. 4
Global News
New Pipelines Drain West Texas Crude Stocks to 4-Month Low
Crude inventories in West Texas dropped in February to the lowest in four months after a converted pipeline began transporting crude from the nation’s biggest shale oil field to the U.S. Gulf Coast, according to data from Genscape.
The drop in storage in the Permian Basin is another sign that new pipelines out of the region have begun to alleviate a crude oil bottleneck that depressed local crude prices as production overwhelmed pipeline capacity and filled storage tanks.
Crude inventories in the Permian Basin fell to 15 million barrels in February to the lowest level since October. The glut had doubled in size from 11 million barrels last June to a record 22 million barrels in November, Genscape reported.
The decline began in mid-November after Plains All American Pipeline LP expanded the capacity of its about 300,000 bpd Sunrise Pipeline. The drawdown accelerated in February when Enterprise Products Partners LP began shipping crude on a converted natural gas liquids pipeline, the 200,000 bpd Seminole-Red line, two months ahead of schedule.
Analysts predict, however, that Permian area storage levels could rise and weaken Midland prices in mid-2019 before other pipelines are completed. Permian Basin output was predicted to hit 4 MMbpd in March, a year-on-year surge of over 1 MMbpd, according to EIA projections.
Three major pipelines transporting more than 2 MMbpd from the Permian Basin to the Gulf Coast are scheduled to open over the next 18 months. They include the 900,000 bpd EPIC pipeline, the 670,000 bpd Cactus II pipeline and the 800,000 bpd Grey Oak pipeline.
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