Permian Pipeline & Production Update

The Permian Basin should remain the bellwether of oil production growth in the U.S. However, with an increase in crude production comes higher associated-gas production and, therefore, higher production of natural gas liquids (NGLs), also called Y-Grade. Under current production growth assumptions, the basin should have ample dry-gas and NGL takeaway through the end of the decade, while Permian crude may require more takeaway capacity towards the end of the decade.

Crude Oil Production & Takeaway

Permian crude oil production grew from an average of 1.7 MMb/d in 2014 to 6.4 MMb/d in 2024, leading to an increase in takeaway capacity. As seen in the graphic below, for much of the past decade there has been ample crude takeaway capacity to allow for production growth, with the exception being a short period at the end of 2018 when crude pipeline utilizations out of the basin moved above 95%. Currently, planned expansions on the crude side total 320 Mb/d of incremental capacity, though this may not be enough to support production growth at the end of the decade.

Dry-Gas Production & Takeaway

As crude production grew, average dry-gas production increased from 4.6 Bcf/d in 2014 to 20.1 Bcf/d in 2024. Similar to crude oil takeaway, dry-gas takeaway has also seen its limits pushed in terms of utilization, mainly due to crude producers typically being less likely to take firm capacity commitments on gas pipelines, thus leading to a slower buildout of natural gas pipeline infrastructure. That said, there are currently four expansions/new pipelines being built out of the basin, which should add nearly 7 Bcf/d of incremental takeaway capacity by the end of the decade. The projects are the GCX Expansion, Blackcomb pipeline, Hugh Brinson pipeline, and the Permian-to-REX pipeline. The latter three are new builds and account for 6.4 Bcf/d in incremental capacity.

NGLs

In addition to the crude and dry-gas pipeline expansions and buildouts, NGL takeaway capacity from the basin is also set to expand from about 4.4 MMb/d of capacity at the end of 2024 to about 5.5 MMb/d by 2030.

The main NGL pipeline projects behind this planned expansion of takeaway capacity are the Bahia NGL Pipeline, West Texas Gateway Expansion, and the Lone Star Express Expansion II. Enterprise is building the 600-Mb/d Bahia NGL pipeline, which will allow the company to switch its 210-Mb/d Seminole Red pipeline from NGL service back to crude service. Altogether, the Bahia NGL pipeline and the above expansions will allow NGL production, at current recovery, to grow throughout the end of the decade without capacity constraints.

Going forward

The Permian Basin looks to be set for growth on the dry-gas and NGLs side but may require more crude pipeline capacity by the end of 2030. Also, as crude economics should continue to drive operator activity, more crude takeaway capacity will likely be built as utilizations increase. Be on the lookout for more Energy Insights, as BTU Analytics will continue to cover production and midstream updates for key basins in the U.S. and elsewhere!

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