Growing crude production out of Permian basin in Texas and New Mexico will create bottleneck in coming years
There is currently enough pipeline capacity but Permian production is growing rapidly and at some point, there is "going to be a day of reckoning," Enterprise Products Partners senior vice president Brent Secrest said at the Argus Americas Crude Summit in Houston, Texas.
The bottleneck will likely start in late 2019 or 2020, said Magellan's head of commercial crude Robert Barnes. "You are going to run into another wall for infrastructure capacity," he said.
Midstream companies have expanded existing systems and are planning new lines to accommodate the expected growth in the Permian. Most of the projects target the US Gulf coast amid rising interest in exporting US crude.
Enterprise is ramping up a new oil pipeline which will add 450,000 b/d of takeaway capacity from its Midland, Texas, terminal to its Sealy storage facility west of Houston, which is connected to the company's Echo terminal. The line, when in full service, will include four segregations for West Texas Sour (WTS), West Texas Intermediate (WTI), higher-gravity crude (dubbed Light WTI) and condensate.
Limited service started in November 2017 and the line is expected to be at full capacity by the second quarter of this year. The line is currently only moving WTI quality crude, Secrest said.
Magellan is also building out Permian infrastructure. The company has ordered the pipe for a
250,000 b/d crude and condensate pipeline from Wink to Crane, Texas, in the Permian's Delaware basin. Crane is the origin point of Magellan's 275,000 b/d Longhorn pipeline which carries Permian crude to Houston.