Plains All American CEO Sees Further Consolidation in Pipeline Industry
NEW YORK (Reuters) — The oil pipeline industry is shifting out of a growth phase and consolidation is likely, Plains All American Pipeline LP CEO said on Wednesday, as crude prices languish due to a collapse in demand after the COVID-19 outbreak.
“As we go forward and times are continuing to be more challenging, I think you’re going to see more of that (consolidation),” CEO Willie Chiang said at the Barclays CEO Energy-Power conference.
Midstream companies raced to add pipelines as shale production boomed, but analysts and traders have said that pipeline capacity out of the Permian basin, the biggest in the country, is more than needed at current production levels.
Earlier on Wednesday Enterprise Products Partners LP abandoned a major 450,000-barrels-per-day Permian crude pipeline project in Texas and agreed to give customers lower near-term commitments on other pipelines as oil prices remain stagnant.
Others, including Phillips 66 and Plains’ joint venture Red Oak project, have been deferred.
Red Oak is a system comprised of multiple pipeline projects that was set to transport crude from Cushing, Oklahoma, and the Permian basin, to the Texas Gulf Coast.
Both major oil benchmarks are trading close to three-month lows as the global health crisis continues to flare with coronavirus cases rising in India, Great Britain, Spain and several parts of the United States.
The oil and gas rig count, an early indicator of future production, is about 71.5% below this time last year.
As prices recover to $40-$45 a barrel, Permian oil producers are expected to increase completion activity and rig counts are likely to increase significantly once prices reach the $45-$50 a barrel range, Chiang said.
“The Permian is going to be a key part of the future ... takeaway capacity is more than needed currently not just for crude but also NGLs as well as natural gas. The constraints have been significantly been removed with the reset of production, which positions it well for when production comes back,” Chiang said.
Related News
Related News
- Keystone Oil Pipeline Resumes Operations After Temporary Shutdown
- Biden Administration Buys Oil for Emergency Reserve Above Target Price
- Enbridge to Invest $500 Million in Pipeline Assets, Including Expansion of 850-Mile Gray Oak Pipeline
- Williams Delays Louisiana Pipeline Project Amid Dispute with Competitor Energy Transfer
- MEG Energy Confirms Trans Mountain Pipeline Expansion to Begin Line Fill in April
- Evacuation Technologies to Reduce Methane Releases During Pigging
- Editor’s Notebook: Nord Stream’s $20 Billion Question
- Enbridge Receives Approval to Begin Service on Louisiana Venice Gas Pipeline Project
- Russian LNG Unfazed By U.S. Sanctions
- Biden Administration Buys Oil for Emergency Reserve Above Target Price
Comments