New pipelines allow for more oil to be transported from Permian Basin

Pipeline expansion projects are expected to better accommodate for the amount of crude oil transported from the Permian Basin to refineries on the U.S. Gulf Coast, according to the U.S. Energy Information Administration. Crude oil production continues to rise in the basin of western Texas and eastern New Mexico, and limited transportation capacity has impacted oil prices.

One sign of a transportation capacity shortfall was the price difference between West Texas Intermediate (WTI) crude oil at Midland, Texas, and at Cushing, Okla. In late 2012 and mid-2014, the price at WTI-Midland was at least $15 per barrel lower than at WTI-Cushing.

“Pipeline infrastructure in the Permian is now better equipped to handle new production than it was in 2014,” according to the EIA. “Several pipelines that came online to accommodate rising Permian production in recent years, such as Magellan’s BridgeTex pipeline, Sunoco Logistics’ Permian Express pipeline and Plains All American’s Cactus pipeline, are undergoing expansions that are set to come online later this year, adding approximately 340,000 (barrels per day) of capacity.”

Along with the expansion projects, Enterprise Product Partners is building a pipeline between Midland and Houston. It will have a capacity of 450,000 barrels per day and should be completed later this year. “After 2017, several more new pipelines and expansions are planned, or are in the planning stages, that could carry any additional increases in Permian production,” according to the EIA. “Other pipelines project developments recently completed in the Gulf Coast will allow Permian crude oil to be sent to refining centers in Corpus Christi and Houston, St. James in Louisiana, and points in between.”