Lack of pipelines continues to slow production from massive Permian Basin wells

Bloomberg/Fuel Fix:
Pipeline bottlenecks in North America’s biggest oil field are so pervasive that drillers are quitting new wells at a record pace. And it’s about to get a lot worse.

The vast pipe networks that haul crude from the Permian Basin are almost completely full thanks to a production boom in the oil-rich area of West Texas and New Mexico that rivals Saudi Arabia’s Ghawar field in massiveness. Explorers who’ve been drilling feverishly to cash in on an OPEC-driven price rally are now slamming on the brakes to let pipeline owners catch up.

As a result, the number of Permian wells that were drilled but left unfinished surged to 3,203 last month, a 90 percent increase from a year earlier and the highest since the Energy Department began tracking them in 2013. Postponing fracking, the final stage of drilling, reduces the supply a company needs to ship to markets. The jump in unfinished wells is a harbinger of oil producers actually shutting down older wells.
...
EOG Resources Inc., the world’s second-largest independent oil producer, also sounded the alarm, warning that smaller operators that haven’t already locked in pipeline space will soon feel the brunt.

“Companies that were a little late to the table are going to struggle,” Ezra Yacob, EOG’s exploration chief, said during the JPMorgan Energy Conference on Wednesday. “They’re not going to have a lot of leverage at the negotiating table.”

As for EOG, which estimates almost 60 percent of its untapped crude is resides in the Permian, pipes are not an issue and most of its production in the region is shielded from the steep penalties other producers are paying in the form of higher rail or trucking fees to carry their oil.
...
The piece does not explain why pipeline construction is lagging so far behind production.   Major oil companies like ExxonMobile are building their own infrastructure to get their oil to market, but they too are looking at a lag time. 

I suspect the market downturn a few years ago caused some projects to be shelved and getting them back up is like turning an aircraft carrier as opposed to a speedboat.

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