According to Westwood’s latest US Drilling and Completion report, the Permian pipeline takeaway capacity constraints will result in 345 completions most likely to be deferred by the end of next year, thereby deferring US$1.4 billion in completion spend.
The report predicts that the supply chain logistics and capital allocated to the expected completions will have to find new buyers or be stored, resulting in increased inventory and maintenance costs, and completion spend delayed or reallocated on other basins.
“But, every cloud has a silver lining,” said Westwood Vice President, Commercial Todd Bush.
“Midstream industry, on the other hand, is experiencing a second heyday thanks to unconventional plays.
“Crude and NGLs need to be moved, often from areas with little or no infrastructure, so you can expect operators to be more creative to find and fund new projects to lessen the current constraint.
“We estimate US$3.1 billion in 2018 of CAPEX and $3.6 billion in 2019 will be spent on pipeline construction which equates to a 21 per increase from 2017.
“This also confirms the urgency and the level of activity in the basin needed to alleviate pressure.”
For more information visit the Westwood website.
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