• 4 minutes China goes against US natural gas
  • 12 minutes WTI @ 67.50, charts show $62.50 next
  • 15 minutes Saudi Fund Wants to Take Tesla Private?
  • 46 mins Downloadable 3D Printed Gun Designs, Yay or Nay?
  • 52 mins Peak Oil is Now!
  • 5 hours Rattling With Weapons: Iran Must Develop Military To Guard Against Other Powers
  • 7 hours Russians hacking vs U.S., Microsoft President: Russians Targeting All Political Sides
  • 3 hours Corporations Are Buying More Renewables Than Ever
  • 13 hours VW Receives Massive Order Of 1,600 All-Electric Trucks
  • 21 hours Desperate Call or... Erdogan Says Turkey Will Boycott U.S. Electronics
  • 1 day CO2 Emissions Hit 67-Year Low In USA, As Rest-Of-World Rises
  • 1 day The EU Loses The Principles On Which It Was Built
  • 1 day Permian already crested the productivity bell curve - downward now to Tier 2 geological locations
  • 18 hours Batteries Could Be a Small Dotcom-Style Bubble
  • 1 day The Discount Airline Model Is Coming for Europe’s Railways
  • 1 day Starvation, horror in Venezuela
Keystone XL Delayed…Again

Keystone XL Delayed…Again

The Keystone XL saga has…

New Shipping Regulation Could Be A Boon For LNG

New Shipping Regulation Could Be A Boon For LNG

The International Maritime Organization’s sulfur…

James Burgess

James Burgess

James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also…

More Info

Permian Oil Glut Sees Producers Lose Out on $1.2 Billion Profit

A huge increase in shale oil production from the Permian basin in Western Texas, coupled with a lack of pipelines in the area, has led to a bottleneck of crude oil, forcing prices down.

According to the US EIA, production in the 75,000 square mile Permian basin increased to 1.29 million barrels a day in 2007 and could grow further to 2.3 million barrels a day by 2022. This vast output far exceeds local pipeline capacity which has caused oil prices in the region to fall by an average of $9.82 a barrel in November alone, and robbed oil producers of a potential $1.2 billion in profit a year.

Similar stories can been seen in the Bakken Shale in North Dakota as well as around Oklahoma’s Midwestern pipeline hub, which is unable to cope with the increased supply from shale formations and Canada’s oil sands.

Related Article: Mexico to Privatize State Oil Company Pemex?

Michael McMahon, the managing director of Pine Brook, a private equity firm, explained that “Permian oil is actually very high-quality and should be selling at a premium, if it weren’t for the logistical challenges.”

James West, an analyst at Barclays Plc, has warned that the lack of pipelines will choke any growth in crude production in 2013, suggesting that capital expenditure will likely increase by just one percent compared to this year; that’s after a 20 percent rise in 2010, a 31 percent rise in 2011, a 9 percent rise in 2012. “This is putting a pause on what should be continued spending growth in North America.”

By. James Burgess of Oilprice.com



Join the discussion | Back to homepage

Leave a comment

Leave a comment

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