Permian Basin: How Long Can It Grow in Low-Price, Oversupplied Market

Richard Nemec: Pipeline and Gas Journal

Coming out of the first quarter in 2017, the venerable Permian Basin had no fewer than three major natural gas takeaway pipeline projects on the drawing board along with several liquid pipe projects as well, exuding an industry-leading appeal among the U.S. major oil and gas production basins.

The prospective projects all promised to ease a looming production glut in the Permian producing region, linking to existing pipelines, including those that export gas to Mexico and to a Cheniere Energy Inc. liquefied natural gas (LNG) export facility under construction.

Amidst the buildout, Dallas-based EnLink Midstream completed 150 miles of high- and low-pressure crude gathering pipelines with 100,000-bpd capacity and was expanding its natural gas and natural gas liquids (NGL) footprint in the heart of the Permian. Meanwhile, well-endowed private equity funds managed by Blackstone Energy Partners and Blackstone Capital Partners scooped up the Permian’s largest privately held midstream operator for $2 billion in cash.

From just these industry headlines, it’s easy to get the impression the Permian is the latest bandwagon, and a lot of newcomers are jumping aboard, joining longer term players like EnLink, which entered the Permian in 2012 and has grown its presence there over the past two years. And the proof is overwhelming when it is recognized that just about every major financial and energy industry publication has done a report in recent months touting the dominance of the Permian.

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