ExxonMobil, Plains All American form JV for million-barrel pipeline Two Houston-based companies, ExxonMobil and Plains All American Pipeline, said Tuesday they formed a joint venture to develop a common carrier pipeline to transport more than one million barrels of crude oil and condensate per day from the Permian Basin to the Texas coast. (Read more…)
Good news for continuing development of Delaware basin.
Pioneer Sees Oil at $100 If There’s No Supply Boost: OPEC Update… “Oil ministers from OPEC and its allies have arrived in Vienna for what promises to be one of the cartel’s most contentious meetings in years as Iran opposes proposals to boost production. (All time stamps CET.) If OPEC and its allies don’t increase production, oil prices could rise above $100 a barrel, said Pioneer Natural Resources Co. Chairman Scott Sheffield. It’s better for the producers to act so crude stays in a range of $60 to $80, he said.” Read more at Bloomberg.com
Hey Lawrence,
I had read in the oil blogs and industry periodicals that production and leases are at a standstill due to the lack of pipe availability. I read in one publication that they were capping wells due to the lack of pipe transportation. How much of this is reality? Mary
Mary…there are some holds built into the logistic supply to the oil and gas exploration of the Delaware and Permian Basins…and you have temporary spot shortages of some materials. Tubular goods…pipe…is a major one with 470 plus drilling rigs operating in the Permian and Delaware basins. Casing of various sizes is being demanded at an unprecedented rate and the steel foundries that extrude the pipe are running hard as they can tear 24/7 to supply the demand…but, they get shut down periodically when there is a power outage on the grid supplying them. They use extremely high amperage electric arcs to heat the steel ingots white hot for pipe (metal tube) extrusion. So, if the power goes out for a period of hours…it throws their production of tubular goods off schedule and moves delivery dates of pipe back by days or weeks.
Couple the steel demand outages with similar outages in the chain of production of frack/drilling fresh water, the same with production of frack sands and spotting balls…chemicals and bentonite for drilling mud viscosity and PH control…and top that all off with influenza or 24 hour stomach virus passing through the ranks of the workforce…and it’s a wonder anything gets drilled, fracked, and completed on any sort of schedule.
Once the well is completed, then they face the same supply SNAFUs with gathering pipelines to transport the gas and oil to market…and produced water transport lines to take the produced water to an SWD for disposal. ALL of it has to work together smoothly to get a well drilled and in production. Any glitch in the supply system affects all the other points in the supply system.
Hope that clears it up in your mind, Mary!!
You are the best Lawrence. Mary