Too much oil? Texas boom outpaces supply, transport networks

[Sanguine]

By Liz Hampton, Devika Krishna Kumar and Jarrett Renshaw

MIDLAND, Texas (Reuters) - The west Texas drillers that drove the shale revolution have overwhelmed the region's infrastructure with oil production -driving up costs, depressing regional oil prices and slowing the pace of growth.

The U.S. government continues to forecast the country's oil output rising to fresh record. But competition for limited resources in Texas is making it harder for shale producers to turn a profit and encouraging some to invest elsewhere.

Texas is home to the Permian Basin, the largest U.S. oil field and the center of the country's shale industry. In the past three years, production from the Permian has risen a whopping 1.5 million barrels per day (bpd) to 3.43 million bpd....

https://www.yahoo.com/news/too-much-oil-texas-boom-outpaces-supply-transport-112101928--finance.html

Of all the problems to have....

[thackney]

related:

Permian pipeline constraints for at least 12 months, report says
https://www.chron.com/business/energy/article/Raymond-James-Permian-pipeline-constraints-for-13256461.php
September 25, 2018

A new report says crude oil pipeline constraints in the booming Permian Basin may end sooner than expected and prices will be less affected than previously believed.

The report by analysts at Raymond James says the West Texas region should see pipeline constraints ease by the end of 2019 and that price differences between oil sold in Midland and the Gulf Coast won't be as severe as previously estimated.

The price differential through 2019 for Midland oil compared to Brent, the global benchmark, is estimated to be $15 a barrel for 2019, down from the firm's previous estimate of $25 a barrel....

[thackney]

and:

Report: Permian will need $300B over next 5 years to maintain growth
https://www.chron.com/business/energy/article/Report-Permian-will-need-300B-over-next-5-years-13274898.php
October 2, 2018

The Permian Basin will need $310 billion over the next five years in order to continue to grow and potentially add 3 million barrels of oil production by 2023.

The investments would fund the drilling and completion of up to 41,000 new oil wells in the West Texas region, according to a new report by the consulting firm Arthur D. Little.


The Permian, which is the top oil producing field in the United States, is producing more than 3.4 million barrels of oil a day. Growth of 3 million would put it near 6.5 million barrels a day, a production level above Canada, Iran and Iraq....

[Weird Tolkienish Figure]

Buy rail stocks I guess?

[thackney]

Buy rail stocks I guess?

For a short time, like it did in Bakken area, they can build a terminal faster than a pipeline. 

But eventually most of the pipelines will get built.  Quite a few underway now.

Oil boom in West Texas means challenges to transport crude
https://www.mysanantonio.com/news/texas/article/Oil-boom-in-West-Texas-means-challenges-to-13203029.php
September 4, 2018

...The latest effort to move oil to more lucrative markets was launched last month, when the Houston oil transport company JupiterMLP signed a deal with Vista Proppants and Logistics of Fort Worth to ship West Texas crude by rail from Vista's loading terminal in Pecos. Vista plans to ship about 400,000 barrels a month from its Pecos terminal through 2019 and potentially into 2020, depending on when pipeline projects are completed.

It's unclear how much of crude Vista will handle for JupiterMLP, which has completed permitting to build a processing and export terminal at the Port of Brownsville and plans a 670-mile pipeline from West Texas to the export terminal....

[dfwgator]

You can never have too much oil.  Supply our allies with it, if we can't use it here.

[thackney]

You can never have too much oil.  Supply our allies with it, if we can't use it here.

The problem is not what to do with it.

The problem is the supply grew faster than the pipeline systems to move it to market.

They will catch up, but right now more expensive means of moving it means less dollars paid to the producers.  So consequently, more money will be invested elsewhere until that catches up.