Texas will need an additional 10,950 miles of oil and gas pipelines to accommodate rising production over the years to 2050, an IHS Markit study quoted by S&P Global Platts has suggested.
The Lone Star state is home to three of the most prolific oil and gas deposits in the United States, including the Permian, the Eagle Ford, and the Barnett shale. Gas production from these alone will reach its peak somewhere between 2030 and 2040, at a daily rate of almost 35 billion cu ft before it starts to decline. However, there are not enough pipelines to carry the gas that will be produced in Texas.
The situation is the same in oil. The Texas shale patch is already experiencing problems because of pipeline shortages coming against steadily rising production, with the rise particularly marked in the Permian, where the Energy Information Administration expects the average daily to hit 4.177 million bpd next month. According to IHS Markit, this will further expand to 5.5 million bpd by the middle of next decade.
Since most of the gas produced in Texas is associated gas from oil fields, it’s no surprise that, according to the IHS Markit study, the largest portion of the new pipeline capacity that needs to come on stream to carry the rising flows of hydrocarbons in Texas would be for oil pipelines. These will comprise 47 percent of the total. Another 29 percent of the new pipeline networks would carry gas, the market research firm said, and the rest would be for natural gas liquids.
However, that’s not all. This production growth will spur demand for more processing capacity on the Gulf Coast. Existing refineries would need to be expanded and new ones built, and ports will also need to be expanded to handle the higher export-bound amounts of crude oil and gas heading to world markets.
By Irina Slav for Oilprice.com
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