New York — Two new projects to enhance local Permian crude gathering and trunk line infrastructure were announced earlier this week, which could help bolster Permian crude prices by expanding takeaway capacity.
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Oryx Midstream Services II on Wednesday launched a binding open season to secure shippers to "support the proposed construction and development of new crude oil transportation movements on its regional crude oil transportation system serving the liquids-rich Delaware Basin in Texas and New Mexico," the company said in a statement.
The binding open season began April 17 and is scheduled to conclude at 5 pm CDT on May 31, 2019.
The pipeline will provide a connection from Orxy's Crane, Texas terminal to the Gray Oak Pipeline expected to be in service in the fourth quarter of 2019. The new-build Gray Oak will carry 900,000 b/d of Permian and Eagle Ford crude to the US Gulf Coast.
The Oryx line will also connect Orxy's Midland, Texas terminal with Plains All American Midland South station, where it has access to Plains' 450,000 b/d Basin pipeline, which runs from the Permian to Cushing, Oklahoma.
On Monday, Permian crude oil producer Concho Resources partnered with Frontier Midstream, announcing they would build the Beta Crude Connector to provide crude oil gathering, transportation and storage services in the North Midland Basin of the Permian - one of Concho's key production areas.
The new connector will give Concho greater takeaway access for its crude. In the fourth quarter of 2018, Concho produced 199,000 b/d of crude from its holdings in the Delaware and Midland Basins.
The companies said they will hold an open season for the 100-mile gathering system in April, and expect to start up by mid-2019. The system will also have 250,000 barrels of crude storage, access to truck terminals, and a 150,000 b/d pipeline, with access to both takeaway pipelines and refineries.
CONNECTING THE DOTS
As Permian Basin crude output continues to grow, so does infrastructure to get the crude to market.
As of mid-April 2019, midstream operators have filed permits with the Texas Railroad Commission to build 713.3 miles of crude gathering and transmission pipelines in the state, compared with the 906.5 miles of permits filed with the regulatory agency in all of 2018 for crude gathering and transmission lines.
The addition of connections from wells and storage facilities only makes it cheaper to move the crude to market, improving the economics not only for producers but for end users like refiners and exporters.
This increased gathering capacity, in conjunction with the start-up of additional takeaway capacity, has helped increase the price of crude oil at the Permian oil hub of Midland, Texas.
West Texas Sour in particular has benefited from more pipeline capacity, as US Gulf Coast refiners look to replace lost heavy Venezuelan barrels.
Midland WTS averaged $62.24/b for the week ended April 12, according to S&P Global Platts assessments, putting it at a $1.80/b premium to West Texas Intermediate at Cushing.
So far in the second quarter, Midland WTI and WTS have averaged at $2.91/b and $1.63/b discounts to Cushing WTI, compared with second quarter 2018 discounts of $8.01/b and $8.38/b, respectively.
2019 crude gathering and transmission permits filed with Texas Railroad Commission
|Company||Construction start date||Type||Miles|
|NuStar Permian Transportation||4-Feb-19||Crude oil transmission||21.64|
|EPIC Consolidated||21-Jan-19||Crude oil transmission||1.37|
|COG Operating||14-Jan-19||Crude oil gathering||5|
|EPIC Consolidated||8-Mar-19||Crude oil transmission||43.32|
|NuStar Logistics||15-Feb-19||Crude oil transmission||8.1|
|Pinnacle Midstream||1-Sep-18||Crude oil transmission||9.5|
|ExxonMobil||1-Mar-19||Crude oil transmission||2.2|
|Medallion Operating||1-Apr-19||Crude oil transmission||29.35|
|Noble Midstream||9-Mar-19||Crude oil gathering||2.24|
|Laredo Petroleum||22-Feb-19||Crude oil gathering||1.03|
|Pinnacle Midstream||13-Mar-19||Crude oil transmission||2.5|
|Medallion Operating||17-Apr-19||Crude oil transmission||6.76|
|HFTCO LLC||1-Apr-19||Crude oil transmission||6.5|
|Medallion Operating||15-Apr-19||Crude oil transmission||9.27|
|Centurion Pipeline||1-May-19||Crude oil transmission||3.6|
|SCM Crude||1-Apr-19||Crude oil transmission||24.3|
|Felix Midstream, LLC||1-May-19||Crude oil gathering||16|
|Enterprise Crude Pipeline LLC||15-Sep-19||Crude oil transmission||502|
|SCM Crude||29-Apr-19||Crude oil gathering||18.63|
|Source: Texas Railroad Commission||Total as of April 9, 2019||713.31|
-- Janet McGurty, firstname.lastname@example.org
-- Edited by Jeff Mower, email@example.com