x
Breaking News
More () »

Not enough oil capacity in West Texas

"Pipelines today, this is kind of the big constraint for us, we have about 3 million barrels of capacity with the pipelines that exist today, so again at 3.3 million barrels of production to 3.5 million barrels of production you are over your pipeline capacity," James Beauchamp, President, Midland Odessa Transportation Alliance.

WEST TEXAS (KWES) - "Pipelines today, this is kind of the big constraint for us, we have about 3 million barrels of capacity with the pipelines that exist today, so again at 3.3 million barrels of production to 3.5 million barrels of production you are over your pipeline capacity," James Beauchamp, President, Midland Odessa Transportation Alliance.

There has been a significant increase in rigs, and about 70,000 additional barrels worth of oil produced every month here in the Permian Basin.

Which is more than last year, and all the barrels are adding up every month.

"About 800,000 barrels a year that's right under a million barrels that huge, that's a lot of drilling activity," Beauchamp said.

The price of West Texas Intermediate oil is also being affected by too much production and not enough processing.

Which is why an increase of gas pipelines is important to the economy of West Texas.

(Source: https://www.eia.gov/)

"That number as of right now today is about $6.87, so it's a tremendous economic impact that we are losing out on," Beauchamp said.

The oil prices are still better than last year.

"You see it in the price of Crude West Texas Intermediate, which is what we produce here, last year averaged about $3.37 less than Brent crude," Beauchamp said.

About four additional natural gas pipelines are scheduled to come online by 2022 which will help with more processing.

"Pipeline capacity issue, that lack of critical infrastructure that we need to facilitate the economy out here is reflected in the price and it's really sort of senseless because the crude we produce should be worth just as much as the crude they produce anywhere else," Beauchamp said.

Before You Leave, Check This Out