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Not only are drillers putting more and more rigs in the white-hot Permian Basin of West Texas, pipeline operators are also boosting capacity to carry Permian crude to the Houston Gulf Coast area.
BridgeTex Pipeline Company said on Tuesday that it would be expanding the pipeline’s capacity from the Permian Basin to around 400,000 bpd in the second quarter from the current capacity of 300,000 bpd, after making enhancements to existing pumps and related equipment.
The BridgeTex pipeline system currently carries Permian crude oil from Colorado City, Texas, to the Houston Gulf Coast area.
“Beginning early in the second quarter of this year, a newly-constructed origin point at Bryan, Texas, which is located 100 miles northwest of Houston, also will begin operations to accept shipments from the Eaglebine region for delivery to Houston,” BridgeTex Pipeline said in the press release.
BridgeTex Pipeline is held 50/50 by Magellan Midstream Partners and Plains All American Pipeline.
The Permian has been the star shale play in the U.S. and as oil prices started to recover, drilling and M&A activity in the area has jumped. Earlier this month, independent oil and gas player Noble Energy said it would buy smaller peer Clayton Williams Energy in a US$2.7-billion cash-and-stock deal in a bid to expand its footprint in the Permian.
Related: Why Cheap Natural Gas Is History
Just a day later ExxonMobil said it would pay up to US$6.6 billion to more than double its acreage in the superstar shale area.
According to last week’s Baker Hughes report on the rig count in the U.S., the Permian now boasts 281 oil and gas rigs—82 rigs more than in the same week last year.
EIA’s latest Drilling Productivity Report sees output in the Permian rising by 53,000 bpd on the month to come in at 2.180 million bpd in February 2017.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.