Commodities News

New US Pipelines Assured to Start Price Battle for Shale Shippers

The controllers of two new pipelines in West Texas shale fields are offering discounted prices to appeal shippers accustomed to high fees to move oil to export centers, in line with the pipeline corporations and federal filings.

These bargain rates, in one case half the initial revealed rate, will aid strapped oil producers that once needed to sell their oil for about $10 less per barrel due to transport restraints to ship their oil from the largest shale oil field in the nation.

However, pipeline firms, which a year ago have raced to add new capacity to move oil from the Permian Basin to the refining and export center on U.S. Gulf Coast, will face pressure to pare rates in following weeks, said oil merchants and analysts.

The two operators – EPIC Midstream and Plains All American – are opening lines that mixed will in coming months have the ability to carry about 1.6 million barrels of oil per day (bpd) from West Texas to the Gulf Coast.

A third line, the 900,000 bpd strain being constructed by Phillips 66, will open later this year that may boost full capacity to move oil from the area by two-thirds.

Rates for most Permian pipelines have ranged between $4 a barrel and $7 a barrel for the past year due to hovering shale production and a lack of pipeline space. Some corporations have moved to railcars for transport, which can cost $6 to $8 per barrel.

Around the end of 2019, EPIC plans to flow its crude oil volumes on a larger, everlasting line that can carry around 900,000 bpd.

Danielle Hollman

By Danielle Hollman

Danielle is a Market expert with vast experience in commodities. She also has expertise in marketing and international business communication in her career portfolio. She has worked with several entrepreneurs, financial services firms, and media houses. Danielle joined FBI Market News in 2018. Now, she is leading the Commodity column.

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