• 5 minutes Trump vs. MbS
  • 9 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 15 minutes Can the World Survive without Saudi Oil?
  • 54 mins WTI @ $75.75, headed for $64 - 67
  • 15 hours The Dirt on Clean Electric Cars
  • 6 hours Saudi-Kuwaiti Talks on Shared Oil Stall Over Chevron
  • 4 hours Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 5 hours The end of "King Coal" in the Wales
  • 22 hours Uber IPO Proposals Value Company at $120 Billion
  • 6 hours These are the world’s most competitive economies: US No. 1
  • 59 mins EU to Splash Billions on Battery Factories
  • 5 hours Coal remains a major source of power in Europe.
  • 1 day COLORADO FOCUS: Stocks to Watch Prior to Midterms
  • 1 hour U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 13 hours Poland signs 20-year deal on U.S. LNG supplies
  • 1 day UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
Oil Prices Subdued, But For How Long?

Oil Prices Subdued, But For How Long?

Oil prices may have closed…

U.S. And Europe Divided On The Future Of Oil

U.S. And Europe Divided On The Future Of Oil

Oil majors in Europe and…

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


x

Join the discussion | Back to homepage

Leave a comment

Leave a comment

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