Pipeline capacity due online soon will aggravate a surplus of light crude oil on the US Gulf Coast (USGC), suppressing prices and straining export capacity, predicts ESAI Energy LLC.
According to the firm’s North America Watch, 730,000 b/d of new pipeline capacity will have come online between the Permian basin and the USGC by yearend. And by 2019, planned capacity of about 840,000 b/d will be online to carry Permian oil to Corpus Christi.
ESAI expects Permian basin production of light oil to increase by 460,000 b/d this year and by 340,000 b/d in 2018.
“Although we see that the USGC surplus could rise to 2 million b/d next year, its disposition is unclear,” said Elisabeth Murphy, an ESAI Energy analyst. “Lower prices will adversely impact the rate of growth coming from shale production.”
The ability of USGC refiners to increase runs has limits, ESAI notes.
Exports will rise, but the rate will depend on availability of dock and loading space as crude exports compete with product exports.
Another export constraint is the ability of foreign demand for light crude to absorb the US surplus, the firm says.
Its report cites the expansion of transport capacity under way in Houston, Beaumont-Port Arthur, and Corpus Christi in anticipation of growing arrivals of crude from the Permian basin (OGJ Online, July 12, 2017).
