US oil pipeline flows at record high in 4Q
Mar 06, 2024

Crude pipeline volumes for the four biggest US midstream operators logged a record high of 16.5mn b/d in the fourth quarter, according to company data, mostly driven by rising flows from the Permian basin.


Overall flows were up by 6pc from the previous quarter and up by more than 50pc from the 10.8mn b/d logged in the first quarter of 2021, which was the low-water mark for the COVID-19 pandemic cycle. Flows remained well above the baseline level of 14.3mn b/d set in the first quarter of 2020 before pandemic-induced demand shocks and a battle for market share between Saudi Arabia and Russia sent crude prices tumbling to historic lows.


Permian basin pipeline operators' fates are closely tied to field producers in west Texas and eastern New Mexico, who saw an unprecedented drop in output in April 2020 along with a day of negative pricing at the US pipeline hub of Cushing, Oklahoma.

The tides have since turned in the Permian, where rising output drove overall US crude production to an all-time record of 13.3mn b/d in December. ExxonMobil's $59.5bn takeover of US independent Pioneer Natural Resources doubles down on the prolific basin's staying power.


US midstream operator Plains All American Pipeline said it expects output from the Permian to set a fresh record high in 2024, synchronizing with oil majors' plans to boost production in the top-performing shale basin.


Permian output is expected to grow to 6.4mn b/d in 2024 from 6.1mn b/d in 2023, Plains said in an investor presentation.


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The increase will be mainly driven by efficiency gains, as the number of active rigs in the basin holds at 300-320 horizontal rigs. "Our bet would be on the US [exploration and production companies], that they would figure out how to get higher recoveries" from the Permian basin, Plains executive vice-president Al Swanson said.


Plains' projections are in line with recent guidance from top US oil majors, who are targeting longer lateral wells and faster drilling times to squeeze more output from existing infrastructure.


Chevron aims to boost Permian output by 10pc this year, while ExxonMobil expects 7pc growth from its operations there.

Long-haul volumes on Plains' crude pipelines rose by 17pc from the previous quarter to 1.6mn b/d and were up by 7pc from year-earlier levels.


Plains said it expects high utilization on the 670,000 b/d Cactus II pipeline, its joint venture with Enbridge, which runs from the Permian to Corpus Christi, Texas, on the central coast. It also expects rising volumes on its Basin pipeline system from Midland, Texas, to the US midcontinent storage hub at Cushing.


The lion's share of gains in output from the top four US midstream operators came from Plains and Energy Transfer, while Enterprise Products Partners' volumes held steady and NuStar volumes were up by 100,000 b/d to 1.3mn b/d.


Energy Transfer set record volumes on its crude pipeline system in the fourth quarter as production from the Permian rose.

Texas crude transport volumes rose by 39pc from a year earlier to 5.9mn b/d, driven by rising output from the Permian. Crude volumes also got a boost from Energy Transfer's recent acquisitions.


Energy Transfer in August agreed to buy Crestwood Equity Partners in a transaction valued at $7.1bn, after moving to purchase Lotus Midstream in March for $1.45bn.


The Lotus acquisition assets included the Centurion pipeline that connects Permian producers with the hub at Cushing, and more than 2mn bl of storage capacity in Midland.


Volumes on Energy Transfer's Bakken pipeline were higher because of rising output from the Bakken shale in North Dakota, and volumes on its Bayou Bridge system in Louisiana grew because of strong Gulf Coast refinery demand.


Energy Transfer's crude exports from its terminals in Nederland and Houston, Texas, fell to 3.4mn b/d, down by 5pc from the previous quarter's record of 3.6mn b/d but up by 16pc from a year earlier.


Enterprise Products Partners posted record volumes on its crude pipelines and marine terminals in the fourth quarter.

Crude pipeline transportation volumes increased to a record 2.6mn b/d in the fourth quarter, up marginally from the previous quarter and a 32pc increase from a year earlier, with increased flows on its Midland-to-Echo system from the Permian to the Houston area.


Enterprise moved a record 1mn b/d at its crude oil marine terminals in the fourth quarter, up slightly from the previous quarter and up by 32pc from a year earlier, with rising volumes at the Enterprise Hydrocarbons Terminal (EHT) on the Houston Ship Channel. "We are seeing more crude across our docks," Enterprise co-chief executive Jim Teague said.

By Chris Baltimore

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Oil eases on higher US crude output, hopes of Israel-Hamas ceasefire

By Emalee Springfield • 02 May, 2024
HOUSTON, April 30 (Reuters) - Oil prices fell 1% on Tuesday, extending losses from Monday, on the back of rising U.S. crude production, as well as hopes of an Israel-Hamas ceasefire. Brent crude futures for June, which expired on Tuesday, settled down 54 cents, or 0.6%, at $87.86 a barrel. The more active July contract fell 87 cents to $86.33. U.S. West Texas Intermediate crude futures were down 70 cents, or 0.9%, at $81.93. The front-month contract for both benchmarks lost more than 1% on Monday. U.S. crude production rose to 13.15 million barrels per day (bpd) in February from 12.58 million bpd in January in its biggest monthly increase since October 2021, the Energy Information Administration said. Meanwhile, exports climbed to 4.66 million bpd from 4.05 million bpd in the same period. U.S. crude oil inventories rose by 4.91 million barrels in the week ended April 26, according to market sources citing American Petroleum Institute figures on Tuesday. Stocks were expected to have fallen by about 1.1 million barrels last week, an extended Reuters poll showed on Tuesday. Official data from the EIA is due on Wednesday morning. Gasoline inventories fell by 1.483 million barrels, and distillates fell by 2.187 million barrels. Expectations that a ceasefire agreement between Israel and Hamas could be in sight have grown in recent days following a renewed push led by Egypt to revive stalled negotiations between the two. However, Israeli Prime Minister Benjamin Netanyahu vowed on Tuesday to go ahead with a long-promised assault on the southern Gaza city of Rafah. "Traders believe some of the geopolitical risk is being taken out of the market," said Dennis Kissler, senior vice president of trading at BOK Financial. "We're not seeing any global supply being taken off the market." Continued attacks by Yemen's Houthis on maritime traffic south of the Suez Canal - an important trading route - have provided a floor for oil prices and could prompt higher risk premiums if the market expects crude supply disruptions. Investors also eyed a two-day monetary policy meeting by the Federal Reserve Open Market Committee (FOMC), which gathers on Tuesday. According to the CME's FedWatch Tool, it is a virtual certainty that the FOMC will leave rates unchanged at the conclusion of the meeting on Wednesday. "The upcoming Fed meeting also drives some near-term reservations," said Yeap Jun Rong, market strategist at IG, adding that a longer period of elevated interest rates could trigger a further rise in the dollar while also threatening the oil demand outlook. Some investors are cautiously pricing in a higher probability that the Fed could raise interest rates by a quarter of a percentage point this year and next as inflation and the labor market remain resilient. U.S. product supplies of crude oil and petroleum products, EIA's measure of consumption, rose 1.9% to 19.95 million bpd in Feb. However, concerns over demand have crept up as diesel prices weakened . Balancing the market, output from the Organization of the Petroleum Exporting Countries has fallen in April, a Reuters survey found, reflecting lower exports from Iran, Iraq, and Nigeria against a backdrop of ongoing voluntary supply cuts by some members agreed with the wider OPEC+ alliance. A Reuters poll found that oil prices could hold above $80 a barrel this year, with analysts revising forecasts higher on expectations that supply will lag demand in the face of Middle East conflict and output cuts by the OPEC+ producer group. View on the Reuters Website

Oil and gas industry’s “strong” free cash flow to support increasing production targets

By Emalee Springfield • 01 May, 2024
Last year, the demand for loans from oil and gas companies fell 6% year-on-year, and that followed a decline of 1% in 2022. Oil and gas companies don’t need a lot of loans because they’re generating so much money these days from their underlying businesses, said Andrew John Stevenson, senior analyst at Bloomberg Intelligence. And that trend is likely to continue through the end of the decade, he said. “The oil and gas industry has experienced a number of booms and busts over the past few decades, but for now, it appears to be flush with cash,” he said. The healthy balance sheets reflect the boost that companies have received from rising oil prices, buoyed by robust demand and OPEC+ production cuts. The sector’s free cash flow is so strong that the group’s leverage ratio, which measures a company’s net debt relative to earnings before interest, taxes, depreciation and amortization, fell to 0.8 in 2023 from 2.4 in 2020, Stevenson said. The ratio will likely slide below zero by the end of the decade, he said.
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