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Permian: Oil Pipeline Takeaway. Too Much or Just Fit?
10/17/2017
Midstream key regional players continue to plot new pipelines to take all the petroleum from West Texas to refineries, export hubs and petrochemical plants.
However, even with production from the Permian Basin being up 24% since the year began, the capacities being built may not find their customers.
Almost a two-fold increase in takeaway will mean lower margins. Production will ot keep up with such growth soon enough.
No operator abandons exisitng projects. Yet, a hunt for partners has begun.
Among the players involved are Kinder Morgan Inc. (NYSE: KMI), DCP Midstream LP (NYSE: DPM), and also Targa Resources Corp. (NYSE: TRGP) not to mentione others.
Some analysts say output can accommodate many of the new transportation lines. Permian production should rise through 2026 but it may peak sooner.
The competition for deals to fill the pipelines is so fierce that margins for operating the lines are likely to be thin without consolidation.
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US Midstream Research 2022 Overview: TOP Providers, Their Assets and Stories
The midstream sector plays a vital role in the oil and gas supply chain, serving as a crucial link. As the energy transition continues, this industry, like the broader sector, encounters various risks. Yet, existing analyses have predominantly concentrated on the risks faced by the upstream and downstream sectors, leaving the fate of the midstream relatively unexplored. In a nutshell, midstream operators differentiate themselves by offering services instead of products, resulting in potentially distinct revenue models compared to extraction and refining businesses. However, they are not immune to the long-term risks associated with the energy transition away from oil and gas. Over time, companies involved in transporting and storing hydrocarbons face the possibility of encountering a combination of reduced volumes, heightened costs, and declining prices.
U.S. Natural Gas Pipelines Infrastructure Overview by Rextag
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XCL Resources is seeking approval from the Federal Trade Commission (FTC) for its proposed acquisition of Altamont Energy LLC, another Utah-based oil producer. This initiative is backed by XCL's parent entity, EnCap Investments LP, a notable private equity firm. Discussions about purchasing Colorado-based Altamont Energy began in the previous summer, as highlighted in FTC documentation.
Tallgrass Energy has started a new open season for the Pony Express Pipeline, and this is the second time they're doing it in 2024. They're looking for companies that want to move their crude oil from the Williston Basin and are offering special rates as an incentive. This 30-day event kicked off on March 11. To get the full details, companies need to sign a confidentiality agreement with Tallgrass.