Energy & Environment

New Pipelines To Relieve “Bottleneck” In 2019, But What About After?

One research firm expects some planned pipelines will be consolidated or delayed.

A West Texas pipe yard in 2016.

Texas is gearing up for a surge of oil exports in 2019, thanks to multiple new pipelines that are expected to come online late in the year. But a new report from the research firm Morningstar, suggests the industry is planning more pipelines than it needs over the longer-term, raising the risk of an overbuild.

For most of 2018, producers in West Texas have been constrained by a lack of pipelines to get their oil to the Gulf Coast. A handful of new projects aims to fix that in 2019, potentially unleashing a flood of oil to the coast and then abroad.

But according to Morningstar’s report, if all the pipelines planned for the next three years get built, there would be too much oil going to the coast, where it could get hung up at export docks.

Analyst Sandy Fielden, who wrote the report, said companies will probably consolidate or delay some of the projects.

“There’ll be some kind of shakeout, and obviously that will depend largely on the extent to which we see a continued increase in crude production,” Fielden said.

An October report from Moody’s Investors Service had already suggested exploration and production would be limited in the first half of 2019 as pipeline constraints persist. The more recent slide in oil prices, particularly hard-felt in the Permian Basin, has added to the prospects for a slower new year.

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