When discussions turn to why shale production is not more widely developed outside of North America, there are multiple answers: lack of technical know-how; inadequate equipment, particularly in pressure pumping; and land that is largely in public hands.

But there is another important factor at work—namely, a well-developed pipeline infrastructure.

And while in certain regions there have certainly been impediments to growing that infrastructure—albeit loosen­ing up now with the Trump administration—that hasn’t been the case in Texas. The state has been quick to respond to new areas of production growth, and access to adequate takeaway has complemented the bounty of multi-stacked pays in the Permian to great effect.

The Permian, according to a recent presentation by Plains All American Pipeline LP, accounted for about half of the Lower 48 rig count as of January. Notably, the basin made up approximately 60% of rigs added in the Lower 48 since the May 2016 lows.

With the rapidly rising rig count, it came as little surprise that concerns were recently mounting as to whether there would be sufficient takeaway to meet the surge in Permian production (see this column in the January/February issue). The question posed by industry observ­ers: Absent new project announcements, are there likely to be takeaway constraints, beginning in late-2017/early-2018?

The response by the industry was prompt.

BridgeTex Pipeline Co. LP announced an expansion of its pipe­line to about 400,000 barrels per day (bbl/d), up from its current 300,000 bbl/d capacity, with an in-service date of the second quar­ter of this year following enhancements to existing pumps and related equipment. Similarly, Plains All American said it planned an expansion of its Cactus Pipeline to 390,000 bbl/d, an increase of 60,000 bbl/d. The added capacity is expected to be available in the third quarter of this year.

Importantly, Enterprise Product Partners LP announced on its fourth-quarter earnings call that its planned Midland-to- Sealy Pipeline project would be expanded. Enterprise indicated it had received approaching 300,000 bbl/d of commitments and, based on negotiations already under way, it had decided to go ahead and expand the pipeline’s capacity by 150,000 bbl/d to 450,000 bbl/d. The projected in-service date for the pipeline is around mid-2018.

Setting in motion these expansion projects has pushed out takeaway concerns that were looming around the turn of this year.

But again—with upstream activity levels continuing to escalate— the recurring question relates to whether—or when—a further round of takeaway is likely to be needed.

Answers vary, of course, depending on the scope and pace assumed for drilling activity. The presentation by Plains All American estimated Permian production exiting 2017 will be run­ning around 2.5 million barrels per day (MMbbl/d) and will grow to over 3 MMbbl/d exiting 2018. Denver-based East Daley Capital fine-tunes its numbers at 2.54 MMbbl/d and 2.95 MMbbl/d for the final quarters of 2017 and 2018, respectively.

But it’s the interplay between production and capacity that counts. With the capacity additions from BridgeTex and Cactus, East Daly still sees utilization of takeaway rising to over 90% in the second half of 2017. And even with the Midland-to-Sealy expansion add­ing a further 450,000 bbl/d in mid-2018, it sees rapid absorption of capacity and utilization remaining above 90%, with 2.95 MMbbl/d of production vying for 3.11 MMbbl/d of takeaway in the final quarter of 2018.

East Daley projects ongoing increases in production to about 3.24 MMbbl/d in the 2019 fourth quarter.

“These projects give us only a little more runway,” observed Ryan Smith, director of research at East Daley. “There’s likely to be an opportunity for someone to step up and announce a capacity expansion or new pipeline to come on by late-2018. That’s assuming the U.S. market can handle that much new production.”

East Daley examines rig activity by basin and distinct gathering systems, including data on numbers of rigs, drill times for wells and initial production rates, all of which is used to forecast system volumes. Its Midstream Activity Tracker is focused primarily on natural gas and NGL, but its research team is quickly unfolding similar proprietary data for crude oil. Its key principals are mainly former Bentek Energy executives.

Chris Sheehan can be reached at csheehan@hartenergy.com or 303-800-4702.