MIDLAND, Texas—Texas crude oil production, already on a path to new highs, doesn’t seem to be slowing down any time soon.
Greg Haas, director of integrated energy for Stratas Advisors, said Texas production will roughly double within the next five years. In his presentation at Hart Energy’s Midstream Texas Conference and Exhibition on June 6, Haas forecasted that the Permian Basin would push out most of that oil at a rate of roughly 5.5 million barrels per day (MMbbl/d) to 6 MMbbl/d of crude.
“We definitely have the production and as far as the differentials, we have those too right now,” he said.
On the wet gas side, he predicted Appalachian plays will outdo the Permian in the next five years by producing between 60 billion cubic feet per day (Bcf/d) and 80 Bcf/d. He said he expects to see a 65% to 80% gain for NGL.
According to Haas, Texas has the differentials and production to grow exports significantly—along with global interest for those products.
In 2017, he said Texas reached many global buyers amid sub-$5 differentials and averaged about 1.1 MMbbl/d of crude exports. Stratas Advisors’ North American Oil Service report cited Canada as the main destination for U.S. crude with 324,000 bbl/d and China following with 204,000 bbl/d.
“China and other parts of Asia are coming on strong,” he added. “The Atlantic Basin, quickly reachable by multiple forms of tankers, has definitely ramped up exports around the globe.”
The report also showed that throughout 2017, LNG reached more nations with 700 Bcf exported from the U.S.
The problem, he said, is infrastructure. Because of the rapid production growth from the Permian, takeaway capacity can’t seem to keep up.
“We’re going to be doubling capacity and gas production in this area and we’re going to continually need to address the wider portions of the barrel,” Haas said.
He said that includes greater gas toll ratios and possibly a move toward dry gas located closer to LNG facilities on the Gulf Coast.
“So we’re going to have to see significant investment in gas processing plants, NGL fractionation facilities, storage facilities and ultimately pipelines—even for NGL security—in rail, and certainly in storage and marine export terminals,” Haas explained.
Haas said production will continue to outpace pipeline capacity until fourth-quarter 2020 when more infrastructure comes online but said Very Large Crude Carriers will help by adding 1 MMbbl/d to 1.5 MMbbl/d of send-out capacity by the end of 2019 and 2020.
“It looks like some of these capacity gains in the infrastructure will get us ahead of the production, but I call this a treadmill,” Haas said.
Mary Holcomb can be reached at mholcomb@hartenergy.com.
Recommended Reading
Deep Well Services, CNX Launch JV AutoSep Technologies
2024-04-25 - AutoSep Technologies, a joint venture between Deep Well Services and CNX Resources, will provide automated conventional flowback operations to the oil and gas industry.
EQT Sees Clear Path to $5B in Potential Divestments
2024-04-24 - EQT Corp. executives said that an April deal with Equinor has been a catalyst for talks with potential buyers as the company looks to shed debt for its Equitrans Midstream acquisition.
Matador Hoards Dry Powder for Potential M&A, Adds Delaware Acreage
2024-04-24 - Delaware-focused E&P Matador Resources is growing oil production, expanding midstream capacity, keeping debt low and hunting for M&A opportunities.
TotalEnergies, Vanguard Renewables Form RNG JV in US
2024-04-24 - Total Energies and Vanguard Renewable’s equally owned joint venture initially aims to advance 10 RNG projects into construction during the next 12 months.
Sitio Royalties Dives Deeper in D-J with $150MM Acquisition
2024-02-29 - Sitio Royalties is deepening its roots in the D-J Basin with a $150 million acquisition—citing regulatory certainty over future development activity in Colorado.