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Growth in the Permian will drive new infrastructure projects

09/07/2019
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The continued growth in output from the Permian Basin will drive a new wave of spending on major infrastructure projects as producers demand extra crude oil takeaway capacity. That’s according to an analysis released by energy consultancy firm WoodMac this week.
Growth in the Permian will drive new infrastructure projects
According to WoodMac’s findings, Permian producers will require extra crude oil takeaway capacity of up to 500,000 barrels per day by the end of the next decade. 

A moderate overbuild of pipeline capacity is expected in the early 2020s as the current wave of pipeline investments are completed, with midstream operators set to add about 4 million b/d of new US Gulf-Coast bound capacity by the end of 2022.

The wave of spending anticipated by WoodMac includes seven proposals for new Permian pipelines, with four ultimately reaching a final investment decision (FID). More than 2 million b/d of this new capacity will flow into the Corpus Christi market for export.

John Coleman, WoodMac’s principal analyst for the North American crude markets commented on the need for a ‘midstream boom’, saying:

“As production growth expands well into the 2030s, US Gulf Coast-bound pipeline capacity will tighten. By the mid-2030s, Permian-to-Gulf Coast pipeline utilisation will surpass 92% in the absence of further investment, necessitating pipeline expansions or greenfield capacity.”

“We are in the midst of one of the largest crude infrastructure investment booms in US history, with much of the investment focused on the Permian basin. As massive as this current investment wave is, we don’t think the story is yet finished. Additional capacity adds will be needed again by the end of the next decade.”

“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.”

One thing is for certain, with multiple new midstream infrastructure projects on the horizon there will be plenty of job opportunities from design and planning through to construction and maintenance.

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