The Permian Basin, also known as the West Texas Basin, is expected to produce about 2.6 million additional barrels of crude per day from now through 2021, according to a summary provided by Alerian, a Dallas-based company that publishes the Alerian MLP (master limited partnership) index, which energy-industry professionals use to analyze performance.
The loosening of constraints and new pipelines coming online mean that takeaway capacity should be enough, if not more than enough, for the next couple of years.
But competition is increasing; the boost in prices that Permian saw in 2019 is a thing of the past, as differentials have tightened; and the monetary focus is shifting back to what Alerian calls “the bread and butter of the midstream space - fee-based cash flows from pipelines.”
According to Alerian, crude production in the Permian Basin has grown by nearly 4 million barrels per day since 2010; and while the rate of growth will likely be slower, it is expected to continue this year and in 2021 at an estimated 800,000 barrels per day. Further on down the line, Enterprise Products Partners has projected an increase of 2.6 million barrels per day (of both crude and condensate) over last year’s production by 2025, to a total of 7.3 million barrels per day.
According to Alerian, the elimination of constraints around building pipelines has allowed the construction of new infrastructure that will help continue the growth in production—up to a capacity of an additional 2.6 million barrels per day.
The largest of those pipelines now being built, the Wink to Webster Pipeline, will have a capacity of more than 1 million barrels per day. Expected to be operational by early next year, the pipeline will ship crude oil from the Permian Basin to the Houston area.