The News & Observer By JORDAN BLUM 11/18/2018
Pipelines have traditionally operated as the dull middle man of the energy sector, a business so boring that the hard-charging Enron dumped its pipeline holdings to chase sexier businesses during its rapid, but short-lived rise.
The Houston Chronicle reports today, however, the once sleepy industry is where the action is, attracting billions of dollars in investment, launching new companies and spurring a wave of mergers, acquisitions and sales.
Nowhere is the action more intense than in Texas, where companies of all sizes, public and private, are planning to spend more than $40 billion to build or expand almost 10,000 miles of pipelines — long enough to stretch from West Texas to China — to connect booming oil production in the Permian Basin primarily to refining and export markets along the Gulf Coast.
The players buying and building pipelines include the world's largest energy companies, such as Exxon Mobil of Irving, major Houston pipeline companies like Kinder Morgan and Plains All American, refiners such as Phillips 66 of Houston, and a growing list of startups backed by private equity investors. Over the past few years, analysts count dozens of new pipeline companies entering the market and more than 20 multibillion-dollar projects potentially getting underway.
"They seem to be announcing new pipelines every day," said Sandy Fielden, director of oil and products research at Morningstar, the Chicago investment research firm.
Texas is at the center of the action, aided by its friendly regulatory climate as well as its vast energy resources. Texas accounts for about 40 percent of the nation's record oil production — which the Energy Department estimates at 11.6 million barrels a day — with most of it coming from the Permian. Along with oil, energy companies also are producing record volumes of natural gas and natural gas liquids, such as ethane, propane and butane, which feed the petrochemical industry that's also expanding rapidly along the Gulf Coast.
But the rapidly rising production has outpaced pipeline capacity, leading many companies to leave oil in the ground and burn off natural gas in a practice known as flaring until new pipelines can carry their energy products to market.
"We're feverishly trying to address the needs of the Permian Basin," said Jeff Welch, president of NAmerico Energy, a pipeline startup based in The Woodlands. "These pipeline projects can't come soon enough."
More:
https://www.newsobserver.com/news/business/article221665175.html
