By Mitch Borden
For the first time since last spring, the United States saw its oil production levels drop. This slowdown can be traced to the Permian Basin, where a pipeline shortage is causing producers to cut back.
Last year, oil production was on the rise in the Permian Basin, but then 2019 hit and the region saw a dip in its numbers. That’s according to the U.S. Energy Information Agency’s March crude oil and gas production report.
The decrease in January was around 60,000 barrels less a day than the prior month. Abudi Zein, CEO of clipper data which is a company that tracks oil movement, said this wasn’t exactly a surprise.
“Until new pipelines come online you are going to see continued pressure on production levels in the Permian Basin.”
According to Zein, there probably won’t be dramatic drops in production, but the amount of oil will level out until three new pipelines are operational. That’s expected to happen by next year.
“What you have at the moment in the Permian Basin is a hose with somebody holding his thumb on the end of the hose. Once you lift that thumb, the flow will really jump to meet that full capacity.”
At this point, Zein said, this decrease is just a blip for Permian Basin producers. Even with this drop, the West Texas Oil Patch is still producing 24 percent more oil than it was at the beginning of 2018.