Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil

Permian Basin crude prices depressed by lack of pipelines: analyst

Oil | Crude Oil

Citgo's fate hangs on PDVSA bond payment deadline

Oil

Platts Market Data – Oil

NGL | Oil | Crude Oil | LPG | Oil Risk | Petrochemicals

Platts University New York

Oil | Crude Oil | Refined Products | Gasoline

Crude futures rally following US inventory draws

Permian Basin crude prices depressed by lack of pipelines: analyst

Highlights

Industry players, upstream and downstream markets, refineries, midstream transportation and financial reports

Supply and demand trends, government actions, exploration and technology

Daily futures summary

Weekly API statistics, and much more

Wildfire growth in Permian Basin crude output is outpacing the building of infrastructure to move the oil out of West Texas and eastern New Mexico to Gulf Coast refineries or the oil hub at Cushing, Oklahoma, causing a glut of crude in the region that will depress crude prices until the beginning of 2015, according to an analyst.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Platts unit Bentek Energy projects August Permian crude production at 1.7 million b/d, with current pipeline capacity out of the region at 1.27 million b/d. Rail will play a negligible role in moving crude in the Permian, expected to carry only 627,000 b/d in 2015, Bentek data shows.

"WTI Midland/Cushing differentials should revert to historical levels in early 2015 with completion of Plains' Sunrise pipeline," John Mayes, director of special studies at Turner, Mason, told attendees in Houston at last week's RBN Energy/Turner Mason conference called "Surviving the Flood."

Demand for pipeline capacity has grown so quickly that Enterprise Product Partners, holder of a 13% stake in the Basin Pipeline that is majority-owned by Plains All American, filed with the Federal Energy Regulatory Commission in August to enact a lottery system as a way for new shippers to get space on the line.


In the filing, Enterprise said 214 new shippers submitted nominations totaling 1.8 million b/d of Permian crude on the 450,000 b/d line in July 2014. Just a year ago, in September 2013, there were 11 new shippers seeking space on the line, which still has six regular shippers.

The stranding of crude in the Permian Basin has affected crude price spreads. The differential between WTI out of Cushing and the smaller oil hub in Midland, Texas, widened to $11.50/barrel on Friday. Since last August, the spread has averaged $6.02/b in favor of WTI ex-Cushing, Platts data showed.

WTS ex-Midland traded on average at a $5.70/b discount to WTI ex-Cushing over the last year, in line with recent historical pricing relationships. However, as Permian production ramped up, the more sour WTS has been trading at more than a $10/b discount; it was at $10.55 below WTI Cushing on Friday.

Current pipeline takeaway capacity in the region will be expanded, which is expected to narrow the crude spread differentials.

Following are the major exit pipelines now carrying crude out of the Permian:

Source: Platts, Bentek, RBN/Turner Mason

Current pipeline takeaway capacity will be increased as midstream companies build new lines or repurpose existing natural gas or products pipelines. Below are some of the projects that are expected to send more crude either to the Gulf Coast's refineries or to Cushing:

Source: Platts, Bentek, RBN/Turner Mason

--Janet McGurty, janet.mcgurty@platts.com
--Edited by Kevin Saville, kevin.saville@platts.com