• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 6 minutes UAE says four vessels subjected to 'sabotage' near Fujairah port
  • 13 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 15 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 11 hours Wonders of Shale- Gas,bringing investments and jobs to the US
  • 37 mins Trump bogged down in Mideast quagmire. US spent $Trillions, lost Thousands of lives, and lost goodwill. FOR WHAT? US interests ? WHAT INTEREST ? . . . . China greatest threat next 50 years.
  • 8 hours Why is Strait of Hormuz the World's Most Important Oil Artery
  • 10 hours IMO2020 To scrub or not to scrub
  • 6 hours California's Oil Industry Collapses Despite Shale Boom
  • 8 mins Global Warming Making The Rich Richer
  • 4 hours Rural and Conservative: Polish Towns Go 'LGBT free' Ahead Of Bitter European Election Campaign
  • 3 hours Misunderstanding between USA and Iran the cause of current stand off, I call BS
  • 5 hours North Dakota oil output totals 1.39 million b/d in March, up 4% on month: state
  • 11 hours Knock-Knock: Aircraft Carrier Seen As Barometer Of Tensions With Iran
  • 3 hours Compensation For A Trade War: Argentina’s Financial Crisis Creates An Opportunity For China
  • 16 hours China Downplays Chances For Trade Talks While U.S. Plays ‘Little Tricks’
  • 16 hours Devastating Sanctions: Iran and Venezuela hurting
Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

More Info

Trending Discussions

The Permian Faces Shut Ins Due To Oil Pipeline Shortage

The fastest-growing oil producing region in the United States, the Permian, is nearing the limits of its pipeline takeaway capacity and some producers may be forced to shut in wells within months, according to the chairman of one of the biggest U.S. shale producers, Pioneer Natural Resources.

“We will reach capacity in the next 3 to 4 months,” Pioneer’s chairman Scott Sheffield told Bloomberg in an interview on the sidelines of an OPEC conference in Vienna, which is attended by representatives of some U.S. oil companies.

“Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Sheffield told Bloomberg, commenting on the Permian constraints that threaten to slow down the relentless pace of production growth.

Oil production in the Permian is rising by 800,000 bpd annually, with current production at 3.3 million bpd, Sheffield said, adding that total pipeline capacity is 3.6 million bpd, so producers—especially those that don’t have firm deals for pipeline transportation—will be bumping into the limit of takeaway capacity in the next three to four months.

The Permian oil production in June is expected to reach 3.277 million bpd, and projected to rise by 73,000 bpd in one month to reach 3.350 million bpd in July, according to EIA’s latest Drilling Productivity Report. Related: Can Oil Pull Greece Out Of Poverty?

A lot of new pipelines are being planned and approved, but none of them are expected to come online before the second half of 2019—possibly leaving production stranded.

The Permian pipeline bottleneck is unlikely to ease for at least one year, Sheffield told Bloomberg, noting that this constraint will continue to affect U.S. oil prices, with WTI at Midland, in the heart of the Permian, likely to trade at a huge $25 discount to the WTI priced at Cushing, Oklahoma.

With Permian production booming and pipeline capacity tightening, producers are forced to sell their crude at a painful discount to benchmarks, and they have also recently lost billions of U.S. dollars in market capitalization.

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News