Bridger Pipeline LLC, with affiliates Liberty Pipeline LLC and Red Oak Pipeline LLC, have extended an open season for commitments to carry Lower 48 crude from the Midcontinent and Permian Basin to the Texas coast.
The decision to extend the open season comes as U.S. operators seek more capacity for growing oil production. Wood Mackenzie predicted the Permian could require crude takeaway capacity of up to 500,000 b/d by the end of the next decade.
Red Oak Pipeline LLC, a 50-50 joint venture (JV) with Phillips 66 and Plains All American Pipeline, is designed to carry crude from Cushing, OK, and the Permian into West Texas.
Phillips 66 and Liberty Pipeline LLC JV partner Bridger Pipeline LLC in mid-June sanctioned Liberty Pipeline, a 24-inch diameter system that would stretch from Rockies and Bakken Shale locations to the Cushing hub.
“As production growth expands well into the 2030s, U.S. Gulf Coast-bound pipeline capacity will tighten,” said Wood Mackenzie’s John Coleman, North American crude markets principal analyst. “By the mid-2030s, Permian-to-Gulf Coast pipeline utilization will surpass 92% in the absence of further investment, necessitating pipeline expansions or greenfield capacity.”
On Monday, Medallion Midland Gathering LLC (MMG) and Medallion Pipeline Co. LLC also launched an open season through Aug. 2 to solicit binding, long-term commitments for a crude gathering system in the Permian Midland sub-basin. MMG and Medallion also are testing support for a joint tariff transportation service that would provide shippers with an integrated service to multiple market centers and long-haul pipelines connected to the Medallion pipeline system.
As designed, the MMG system would serve the West Texas counties of Glasscock, Howard, Martin, Midland, Reagan and Upton. For information on the expansion, contact Medallion.
Currently, midstream operators are prepared to add around 4 million b/d of Gulf Coast-bound capacity by the end of 2022. A moderate overbuild of pipeline capacity is projected in the early 2020s as the wave of these pipeline investments are completed.
Seven proposals for Permian pipelines come from this wave of investments. At least 2 million b/d may flow into the Corpus Christi market in South Texas for export.
Coleman said “the next chapter in this story will be focused on ensuring sufficient export terminal capacity in coastal markets. As these new pipelines move into service later this year, we expect a surge in crude export volumes out of Corpus Christi.”
The Port of Corpus Christi, about 200 miles south of the energy capital of Houston, is expected to emerge over the coming decade as the nation’s No. 1 crude export hub because of these major investments in shipping facilities and pipeline infrastructure, according to Wood Mackenzie.
The rapid additions of pipeline capacity could result in two to three years of overbuild, before normal long-haul capacity supply and demand conditions begin to re-emerge, according to Wood Mackenzie research.
The Energy Information Administration recently reported domestic crude production surpassed 12 million b/d for the first time in April at 12.2 million b/d.
The two largest crude production sites, Texas and the Gulf of Mexico (GOM), both marked record levels of production in April as well. Texas reached 4.97 million b/d, while the GOM reached 1.98 million b/d.
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