• 4 minutes Your idea of oil/gas prices next ten years
  • 7 minutes WTI Heading for $60
  • 13 minutes Could EVs Become Cheaper than ICE Cars by 2023?
  • 4 mins Pros and Cons of Coal
  • 2 days Pence says South China Sea Doesn't Belong To Any One Nation
  • 2 days Anyone holding Nvidia stock?
  • 4 hours Is California becoming a National Security Risk to the U.S.?
  • 1 day Why does US never need to have an oil production cut?
  • 2 hours US continues imports of Russian gas which it insists Europe should stop buying
  • 2 days Germany Discusses Lifting Ban on Deporting Syrians
  • 6 mins Warren Buffett
  • 6 hours Regular Gas dropped to $2.21 per gallon today
  • 19 hours Trump administration slaps sanctions on Saudis over Khashoggi's death
  • 2 days I Believe I Can Fly: Proposed U.S. Space Force Budget Could Be Less Than $5 Billion
  • 1 day Commission: U.S. Could Lose Wars With Russia, China
  • 2 days China Claims To Have Successfully Developed a Quantum Radar That Can Detect 'Invisible' Fighter Jets
Alt Text

The Trojan Horse In Oil Markets

Iran sanctions have been at…

Alt Text

New Tech Could Save Big Oil $7 Billion Per Year

The upstream sector could save…

Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…

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:




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




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