August 2019, Vol. 246, No. 8

Global News

Permian to Need More Crude Takeaway Capacity: WoodMac

Planned crude oil pipeline projects may result in a “moderate overbuild” of Permian Basin crude oil capacity in the early 2020s, but Wood Mackenzie analysts project this period of overcapacity will be fairly short-lived before even more capacity is needed. 

“We are in the midst of one of the largest crude infrastructure investment booms in US history, with much of the investment focused on the Permian basin,” said John Coleman, Wood Mackenzie’s principal analyst for North America crude markets.

The latest Wood Mackenzie North America Crude Markets Service long-term outlook shows that even with the rapid buildout in the early 2020s, there will be one more call for additional Permian-to-Gulf Coast pipeline capacity. The analysis indicates at least 300,000-500,000 bpd of crude takeaway capacity will be needed. Based on forecast market demand, an FID on the next needed pipeline may come in the late 2020s, WoodMac said.

“The early 2020s will see a massive build-out in a short period of time – we estimate more than 3.5 MMbpd of Permian-to-Gulf Coast crude takeaway capacity by the end of 2022, effectively doubling long-haul capacity from the basin. This burst of buildout will likely lead to overcapacity short term,” according to the report. 

A current wave of investment includes seven proposals for new Permian pipelines, with four ultimately reaching a final investment decision (FID). More than 2 MMbpd of this new capacity will flow into the Corpus Christi market for export. P&GJ

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