Infrastructure bottlenecks clearing in the Permian Basin

Bloomberg:

The oil fields of West Texas don’t sit still for long.

Take Carrizo Oil & Gas Inc.’s operations, for instance. Just three months after moving drill rigs out of the Permian Basin because of pipeline shortages, the Houston-based explorer is already talking about bringing them back in the middle of next year.

That’s one of several signs the end may be near for a self-imposed slowdown executives call a “frack holiday.”

The result: Carrizo will reach an “inflection point” in 2019 where both production and cash flow begin to rise together, Chief Executive Officer Chip Johnson said on a conference call Tuesday. In other words, things will soon be booming again.

Carrizo is among many smaller operators forced to slow activity in the U.S.’s biggest oil field towards the end of this year after the Permian’s rapid production growth overwhelmed pipelines. The lack of conduits left oil almost trapped, lowering in-basin prices to almost $18 a barrel, or 26 percent, below the U.S. benchmark in September.

But with at least three major pipeline projects scheduled to come online next year, producers are now seeing the problem as a mere footnote in the basin’s ongoing story of surging production growth. Pioneer Natural Resources Co. has enough pipe space to transport all its oil out of the basin through 2020 while Diamondback Energy Inc. has substantial capacity coming on new pipelines next year, the companies said Wednesday.

“It will be a series of events throughout 2019 that occur” to ease the bottleneck, Halliburton Co. Chief Executive Officer Jeff Miller told Bloomberg TV this week. “It’d be easy to see, as we finish the year, things being perfectly normal.”
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This year, the number of wells drilled but waiting to be fracked has increased 50 percent to 3,722, indicating a new wave of production is set to be unleashed once the pipes are ready, spending budgets are approved and frack crews are available.
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There is more.

This is a further indication that US production could completely replace Iranian and Venezuelan production.  What would help the US, even more, is if refineries would switch operations to handle the light crude coming out of the shale wells rather than the heavy crude imported into the US.   The main worry should be over whether Democrats will try to impede US energy production as they did during the Obama administration.