A new report from the U.S. Energy Information Administration finds the increased oil infrastructure in the Permian Basin will be able to meet the area’s expected boom in oil production.
With crude oil production in the Permian Basin marking its gradual but eventual return, a new report from the U.S. Energy Information Administration report finds pipeline capacity has also increased in order to meet demand.
The previous dearth of pipeline infrastructure had in part caused crude in Midland to sell at a lower price compared to crude moving through Oklahoma, according to Mason Hamilton, a petroleum markets analyst with the EIA.
“Once you filled up your pipelines then you have to go to the next most expensive option whether that be by rail, by truck or by barge or boat, or whatever,” Hamilton says.
But now, the EIA finds that pipeline infrastructure in the Permian is more robust than it was in previous years, as pipelines built are beginning to come online.
“Not only that but you also have a couple of newer pipelines being built,” Hamilton says. “Some of them are what I would call inter-regional, where you have stuff moving in and around the Permian. So you would have stuff going from the well-heads, gathering crude oil at the well heads and bringing it to places like Midland where larger pipelines have origin points”
From there, additional pipelines are being built that take Permian crude oil out of the region and into to areas like Corpus Christi and the Gulf Coast. Places where Permian crude oil will have greater access to new markets.