FORT WORTH, Texas—Midstreamers dreaming of Permian profits see plenty of opportunity ahead, but can they keep up with soaring production? Even after new pipeline capacity comes on in second-half 2018 and in 2019, oil, gas and NGL production may outpace the added infrastructure, speakers said at Hart Energy’s recently held DUG Permian Basin conference and exhibition.
“Basically we need a 42-inch line coming out of the Permian every other year [based on crude oil projections],” said Joey Mahmoud, president, Driftwood Pipeline LLC, and senior vice president, Tellurian Inc. “And, out of the Permian we are going to see associated gas is 16, 18, maybe even 20 billion cubic feet a day. That will compete head-to-head with the Marcellus and is something we all need to prepare for.”
Tellurian is the LNG developer that proposes a new 42-in. gas line taking 2 billion cubic feet a day (Bcf/d) from the Waha hub in Pecos County to Lake Charles, La., to fill its proposed Driftwood LNG export terminal.
Mahmoud cited data from RBN Energy that estimated Permian crude output of 3.2 MMbbl/d today will rise to 4.8 MMbbl/d by 2023. The research firm also says natural gas output of 7.5 Bcf/d now will rise to more than 12 Bcf/d by 2023.
Pipelines and more export capacity will be the Permian’s best hope in the face of production that is rising faster than expected, speakers on a markets roundtable said.
“The amount of crude growth we’ve seen is exceeding all projections,” said Greg Haas, senior director of integrated energy for Stratas Advisors. “I think we are on a takeaway treadmill until the mid-20s.”
Haas said Permian NGL production will hit 3 MMbbl/d by 2020 and natural gas production will double to 20 Bcf/d by the mid-20s.
The Permian appears to be growing rapidly, with epic oil expansion of up to 1.1 MMbbl/d this year (a 53% increase since first-quarter 2017), and that magnitude of increase could occur again in 2019 and again by 2025.
He said rail and trucking are expensive alternatives and that in the end, pipelines are the only significant solution to get production out of the basin.
“For natural gas, however, the world is your oyster for LNG exports.”
Leslie Haines can be reached at lhaines@hartenergy.com.
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