The steady growth in Permian crude oil production that everyone was banking on just a couple of years ago didn’t happen as planned. When COVID intervened, Permian oil output sagged and then stabilized at just over 4 MMb/d until last month’s Deep Freeze, when production plummeted and then quickly rebounded. Still, in anticipation of increasing output from the Permian, new takeaway-pipeline capacity from West Texas to the Gulf Coast was built out over 2016-20, as was new crude storage capacity at hubs in the Delaware and Midland basins to support the operation of the new lines. So, with all that construction, the Permian must be sittin’ pretty from a midstream infrastructure perspective, right? Don’t be too sure. From a big-picture perspective, the region has more than enough takeaway capacity, but there are strong indicators — and recent evidence — that in-region storage capacity hasn’t kept pace to be able to handle any hiccups (and worse) that can occasionally rattle the oil patch. Or maybe it’s just that folks don’t fully understand where the Permian’s storage capacity is, how it’s interconnected, and how it’s used. Today, we begin a blog series on crude storage in West Texas and southeastern New Mexico.
Wide Open Spaces – Does the Permian Have Sufficient Crude Storage Capacity to Prevent Disruptions?
