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The Fierce And Controversial Competition To Export Permian Crude

Tuesday Energy Update

(Because Energy Fuels Our Lives)

The booming Permian Basin has been one of the most amazing creators of competition the oil industry has seen in modern times. Every oil boom inevitably creates conflict, as individuals and businesses race to be the first to get in the various “games” that surround oilfield development. But the Permian is so vast, its available resource so gigantic, that it often seems to have created more races than NASCAR .

Examples of the races that have developed in and around the Permian in just the last few years include:

  • The race to acquire leases and proved reserves that has driven the cost of acquisition in the region to as high as $95,000 per acre;
  • The race to reserve drilling rigs and frac crews;
  • The race to hire qualified workers, which continues to grow increasingly fierce over time;
  • The race to provide frac sand;
  • The race to develop and install water recycling technologies;
  • The race to permit and build-out new pipeline capacity as a shortage developed in recent years;
  • The race among producers to reserve capacity on those new pipelines;
  • The race among refiners to finance and build new capacity to refine the light, sweet crude coming out of the Permian and other shale basins in ever-rising volumes;

As the competition to accommodate the Permian has moved ever-further downstream, it has now resulted in a growing conflict on the southern Texas Gulf Coast to be the first facility to build out new capacity to land and load the largest classes of oil tankers – so-called Very Large Crude Carriers, or VLCCs – and send them back out to sea.

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