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Corpus Christi and its O&G Infrastructure
06/07/2017
Permian’s Midstream Takeaway. Are we in for a problem any time soon? Who are the regional industry champions? Read some facts below. Today looking at Corpus Christi. See key facilities on a map above.
As the threat of too much oil and too few pipelines in the Permian Basin continues to loom, midstream developers are trying to keep up with the aggressive pace of producers with some looking toward growing export opportunities on the Texas Gulf Coast.
Magellan is one of several companies looking to lay a new pipeline from the Permian to Corpus Christi, Texas, and also is currently expanding its BridgeTex Pipeline in the basin.
Why the Permian? If you look at the analysis that shows breakeven economics based on where to spend the money, producers that have acreage in the Permian are getting the most profits.
The rig count in the Permian Basin has more than doubled since 2016 with 361 active rigs in the basin as of May 19 vs. 137 a year ago, according to Baker Hughes Inc. (NYSE: BHI).
At the same time, the Energy Information Administration is also projecting an increase of crude oil production in the Permian Basin to an estimated 2.4 million bbl/d in May. The Permian produced about 2 million barrels per day (bbl/d) of crude oil in May 2016.
However, midstream developers are already addressing the projected constraint with announced midstream projects in the Permian so far during second-quarter 2017 significantly exceeding activity in the rest of the U.S., according to a May 23 report by Stratas Advisors.
So far, Permian midstream developers have announced 23 new projects, expansions or completions at expanding pipelines, terminals and docks, tanks and processing plants during the second quarter compared to the 20 projects elsewhere, the report said.
Through its Longhorn and BridgeTex pipeline systems, Magellan currently has takeaway capacity of roughly 575,000 bbl/d, which is expected to increase by 100,000 bbl/d in a month or so following completion of its BridgeTex expansion project.
“Through the process of doing all that we’ve identified some ways to increase the capacity even further,” he said. “We’re very confident we’ll get to 450,000 and we may even be able to get above 450,000 with fairly limited work that needs to be done.”
Barnes said the new pipeline Magellan is developing to transport Permian crude to Corpus Christi will have multiple origin points, both in the Delaware and Midland basins, as well as multiple delivery points in the Corpus Christi area.
Indeed, Texas continues to rank as the U.S. leading natural gas producing state. As a reflection of that, gas transmission and processing activities mount. The complete landscape of the Lone Star State's natural gas industry can be found on Rextag's Texas Natural Gas Infrastructure Map.
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U.S. Natural Gas Pipelines Infrastructure Overview by Rextag
The U.S. natural gas pipeline network is a complex system of pipelines that transport natural gas from production areas to consumers across the country. The pipeline network consists of three main types of pipelines: gathering pipelines, transmission pipelines, and distribution pipelines. Gathering pipelines are small-diameter pipelines that transport natural gas from production wells to processing facilities or larger transmission pipelines. Transmission pipelines are large-diameter pipelines that transport natural gas over long distances, sometimes across multiple states. Distribution pipelines operate at low pressure and are located in or near urban areas. They are often referred to as "utility pipelines" because they are typically owned and operated by local gas utility companies.
Texas Crude 2019 Production: Rigs Down, Production Up
As you know the US Oil Rig Count has dropped by over 20% from January to December 2019. In Texas we saw oil rigs count dropping over 30% in that same time frame.
Kinetik Holdings recently announced a series of transactions in the energy sector. They struck a deal to buy Durango Permian infrastructure for $765 million. At the same time, they're selling their 16% share in the Gulf Coast Express Pipeline to ArcLight Capital Partners for $540 million. The total purchase cost includes $510 million in cash paid immediately and an additional $30 million that will be paid later, depending on whether they decide to expand further.
Recently, the Permian has seen significant acquisitions: Exxon Mobil purchased Pioneer Natural Resources for about $60 billion. Diamondback Energy's $26 billion deal to acquire Endeavor Energy Resources is currently on hold due to requests from the U.S. Federal Trade Commission. Occidental’s acquisition of CrownRock for $12 billion in the Midland.
EOG Resources is pushing boundaries in Ohio's Utica oil play and now drilling on the Sable pad, also located in Noble County. This site features the 3.7-mile lateral currently under construction. The company's first multi-well pads in the area Timberwolf and Xavier have each produced over 200,000 barrels of oil since their inception—Timberwolf in August and Xavier in October. A third site, the four-well White Rhino pad in Noble County, is also showing promising early results, according to Keith Trasko, EOG’s Senior Vice President of Exploration and Production, who noted the wells are performing as expected in their initial weeks.