The Permian basin will need extra crude oil takeaway capacity of up to 500,000 b/d by the end of the 2020s to accommodate growing production, Wood Mackenzie Ltd. researchers forecast.
A moderate overbuild of pipeline capacity is expected in the early 2020s when current pipeline investments are completed. Midstream operators appear set to add about 4 million b/d of new US Gulf Coast-bound capacity by Dec. 31, 2022.
Investments include seven proposals for new Permian pipelines, with four ultimately expected to reach a positive final investment decision (FID). More than 2 million b/d of this new capacity will flow into Corpus Christi, Tex., for export.
The rapid addition of pipeline capacity will result in 2-3 years of overbuild before normal long-haul capacity supply and demand conditions begin to re-emerge, WoodMac said.
John Coleman, WoodMac principal analyst, North America crude markets, said, “As production growth expands well into the 2030s, US Gulf Coast-bound pipeline capacity will tighten. By the mid-2030s, Permian-to-Gulf Coast pipeline utilization will surpass 92% in the absence of further investment, necessitating pipeline expansions or greenfield capacity.”
"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," Coleman said. "As massive as this current investment wave is, we don't think the story is yet finished. Additional capacity adds will be needed again by the end of the next decade."