American Oil and Gas Reporter - PBIOS 2016 Official Program Guide - 122

FIGURE 1

Building gathering systems also protects midstream operators' market share
by ensuring committed volumes are delivered to outbound mainline pipes that
now are competing for business in a
market with too much capacity.

Permian Drilling and Production
2,500

600

500

400
1,500
300
1,000

Rig Count

Thousand Barrels a Day

2,000

200
500

100

-

Ja
nAp 11
r-1
Ju 1
l
O -11
ct
Ja 11
nAp 12
r-1
Ju 2
l
O -12
ct
Ja 12
nAp 13
r-1
Ju 3
l
O -13
ct
Ja 13
nAp 14
r-1
Ju 4
l
O -14
ct
Ja 14
nAp 15
r-1
Ju 5
l
O -15
ct
Ja 15
nAp 16
r-1
Ju 6
l-1
6

0

Production

mainline hubs by replacing costly trucking
fees with lower pipeline tariffs. With
crude prices and drilling rates of return
far lower than they were in 2014, these
cost savings help producers stay afloat.
For midstream companies, building
connector pipes from newer drilling
hotspots in the western Permian's
Delaware Basin to outbound pipeline
hubs located to the south and east provides
a feed-in system to access future volumes.
Producers often dedicate all their output
from specific acreage to midstream gathering operators, thereby guaranteeing future volumes to justify building pipeline
receipt stations.
FIGURE 2

122 THE AMERICAN OIL & GAS REPORTER

Permian Crude Take-Away Stack
3,500
3,000
2,500
2,000
1,500
1,000
500

10 14
/1
1/
1
1/ 4
11
/1
4/ 5
11
/1
7/ 5
11
10 /15
/1
1/
1
1/ 5
11
/1
4/ 6
11
/1
7/ 6
11
10 /16
/1
1/
1/ 16
11
/1
4/ 7
11
/1
7/ 7
11
10 /17
/1
1/
1
1/ 7
11
/1
4/ 8
11
/1
7/ 8
11
10 /18
/1
1/
18

14

11
/

7/

11
/

4/

11
/

14

-
1/

Thousand Barrels a Day

300,000 bbl/d BridgeTex Pipeline from
Colorado City, Tx., to Houston;
* Expanding Plains' 250,000 bbl/d
Cactus Pipeline from McCamey to Gardendale in the South Texas Eagle Ford
basin to 330,000 bbl/d (At Gardendale,
the Cactus Pipeline links to Enterprise
Products Partners' Eagle Ford Pipeline
to Houston and the Plains/Enterprise JV
Pipeline to Corpus Christi, Tx.);
* Sunoco Logistics' 200,000 bbl/d Permian Express II Pipeline from Garden City,
Tx., to Nederland/Port Arthur, Tx.; and
* The Sunoco Logistics/Vitol JV
200,000 bbl/d Sunvit connector between
Midland and Garden City.
In addition to these mainline capacity
expansions, the proposed Enterprise Midland to Sealy pipeline is expected to add
another 450,000 bbl/d of capacity to
Houston, if it is completed as expected
in mid-2018.
These new projects not only relieved
congestion, but have created significant
overcapacity out of the region. Figure 2
shows the outbound capacity stack from
2014 through 2018, as well as the U.S.
Energy Information Administration's
actual and forecast production. The addition of the BridgeTex and Cactus
pipelines in 2015 boosted capacity above
production (black line). The addition of
Enterprise Midland to Sealy in 2018 will
further exaggerate the overcapacity.
With outbound long-haul capacity
overbuilt, midstream infrastructure companies have turned to smaller projects
linking the most active drilling and production plays in the Permian to regional
take-away hubs. These smaller, infill projects make sense for a number of reasons.
For producers, they reduce costs to
transport crude from the wellhead to

Rig Count

Connector Projects
A number of major connector infrastructure projects in the Permian Basin
have come on line recently or are expected
to be in service by the end of 2017, pushing
supplies to mainline take-away hubs.
Navigator's 160,000 bbl/d Big Spring
Gateway Pipeline commenced service in
September 2015, gathering crude from
Martin, Howard, Glasscock, Midland and
Mitchell counties in the North Midland
Basin to Colorado City. The system connects to the BridgeTex, Sunoco Permian
Express II, and West Texas Gulf outbound
long-haul pipes as well as to the 73,000
bbl/d Alon Refinery in Big Spring, Tx.
Medallion Midstream's 105,000 bbl/d
Wolfcamp Connector crude pipeline initially ran 60 miles from Garden City to
Colorado City, Tx., and now has several
gathering extensions completed or under
construction. This pipe gathers production
in Mitchell, Howard, Glasscock, Reagan,
Upton and Midland counties, and connects
with the BridgeTex and Permian Express
II long-haul pipes to the Texas Gulf Coast.
The Midkiff Lateral extends to Crane,
Tx., providing a connection to the Magellan Longhorn Pipeline to Houston, and
a proposed Martin/Midland extension
would provide access to multiple longhaul pipes through Midland.

Local Reﬁnery Consumption

Existing Pipelines

Permian Express II

Bridgetex

Cactus

Midland Sealy

Rail

Production
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