Updated 3/1/2018
Industry News from the Permian Basin:
Plains’ Cactus II pipeline from Permian starts with capacity of 585,000 b/d
A subsidiary of Houston-based Plains All American Pipeline said Feb. 22 its new Cactus II pipeline is fully committed with initial capacity of 585,000 barrels per day from the Permian Basin to Corpus Christi and Ingleside. Cactus II is fully committed with long-term, third-party shipper contracts totaling 525,000 barrels per day, including 425,000 of long-term minimum volume commitments, 100,000 of commitments associated with long-term acreage dedications, and 60,000 for walk-up shippers. Cactus II will have origin points at Crane, McCamey, Midland, Orla and Wink. There will be a combination of existing and two new 26-inch pipelines (Wink to McCamey and McCamey to Corpus Christi and Ingleside).
Plains said capital cost for the two new pipelines will be $1.1 billion, including $700 million to $750 million from Plains, which will operate the pipeline and retain 65 percent ownership. Permitting, right-of-way and procurement are underway with operations expected to begin in 2019Q3. Plains said Cactus II is expandable to 670,000 barrels per day.
Staples: “Imperative to maintain NAFTA provisions”
Negotiations for the North American Free Trade Agreement resumed this week in Mexico City, and Todd Staples, president of the Texas Oil and Gas Association, said Tuesday the 30-year agreement has been essential to the growth and prosperity of the state’s oil and gas industry and created thousands of jobs. He told reporters, “We have a lot at stake as NAFTA negotiations continue because Texas is home not only to oil and natural gas and the pipelines that transport it to Mexico, but also the refineries and petrochemical plants that make the products we export to our neighbors. It’s imperative to maintain the NAFTA provisions.”
Staples released the TXOGA’s annual energy and economic impact. The industry paid $11 billion in state and local taxes and state royalties in FY 2017 ($9.4 billion in FY 2016), including $30 million a day. Staples said the industry paid $1.1 billion to Texas school districts in property taxes.
Birol: U.S. to overtake Russia to become world’s No. 1 oil producer
Fatih Birol, executive director of the International Energy Agency, said Tuesday in Tokyo that the U.S. will overtake Russia as the world’s biggest oil producer by 2019. “Definitely next year,” he told Reuters, if not this year. “U.S. shale growth is very strong; the pace is very strong. The United States will become the No. 1 oil producer sometime very soon.” Birol said he does not see a decline in U.S. crude production in the next four or five years.
Reuters added, “U.S. oil is also increasingly being exported, including to the world’s biggest and fastest growing markets in Asia, eating away at OPEC and Russian market share. Meanwhile, U.S. net imports of crude oil fell last week by 1.6 million b/d to 4.98 million b/d, the lowest level since the EIA started recording the data in 2001, reflecting further erosion in a market OPEC has been relying on for decades.”
Permian Basin, Texas, New Mexico, U.S. add rigs in past week
The counts of active oil and gas rigs in the Permian Basin, Texas and the U.S. posted modest gains in the past week as of Feb. 23, according to Houston-based oilfield services firm Baker Hughes. The Permian Basin gained 2 to 435 active rigs, Texas increased 3 to 482, and the U.S. added 3 to 978. This time last year there were 306 rigs in Permian, 386 in Texas and 754 in the U.S.
Other top regions as of Feb. 23 were Eagle Ford with 70 rigs (unchanged in the past week), Cana Woodford with 69 (up 2), Marcellus with 54 (down 2), Haynesville with 51 (up 1) and Williston with 50 (up 1).
Other top states were Oklahoma with 121 (down 2), New Mexico with 87 (up 2), Louisiana with 60 (up 1) and North Dakota with 49 (up 1). This time last year New Mexico had 48 rigs.
Reeves County continues to lead the Permian Basin, although it declined by 5 active rigs in the past week to 67 as of Feb. 23. Midland County gained 2 to 49. Other leading counties were Lea, N.M., with 50 rigs (up 4 in the past week), Eddy, N.M., with 35 (down 2), Loving with 32 (up 2), Howard with 25 (down 2), Martin with 23 (down 4) and Glasscock with 22 (up 2).