Epic Pipeline’s 700-Mile Project Will Use U.S. Steel to Move Crude and Remain on Original Schedule

Epic Midstream Holdings is still on track to start moving crude oil from West Texas’s Permian Basin to the port of Corpus Christi by this fall and will use steel sourced by U.S. mills.

The plan, which was originally announced in October, will have the company temporarily using its natural gas liquids pipeline to ship crude oil starting the third quarter.

All the needed mainline right of way has been secured for the construction of a separate crude oil pipeline along the route of natural gas liquids pipeline.

Delivery of the 30-inch pipeline required to build the 700-mile project is expected to take place later this month.

The Epic Crude Oil Pipeline runs from Orla, Pecos, Saragosa, Cane, Wink and Midland in the Permian Basin to Gardendale and Helena in the Eagle Ford Shale to the Port of Corpus Christi.

Shortly after delivery, construction of the pipeline is expected to begin and be completed by January 2020.


EPIC's 730 Mile Pipeline to be Converted from NGL to Crude

EPIC Midstream will temporarily convert their multibillion-dollar natural gas liquids pipeline it is building in Texas to service crude oil in an attempt to help alleviate the shortage of pipelines in West Texas’ Permian Basin.

The 730-mile NGL pipeline is planned to be online in the third quarter of 2019 and will deliver crude oil at least until January 2020 when its adjacent crude oil pipeline system is projected to start up.

"We are proud to be able to offer an interim solution for our customers, while we continue to build out the EPIC Crude Oil Pipeline to service this region," said Phillip Mezey, chief executive of EPIC.

EPIC lists its top customers as Houston Firms Noble Energy, Apache Corp. and Midland-based Diamondback Energy.

Houston Chronicle

Kinder Morgan and EagleClaw Authorize $2 Billion Permian Highway Pipeline

Kinder Morgan and Midland-based EagleClaw Midstream said they’ve authorized the proposed $2 billion Permian Highway Pipeline project to transport natural gas from West Texas to Houston and other hubs.

Exxon Mobil and Houston-based Apache Corp are both major customers of the project. Apache Corp also has the option of buying a one-third stake in the pipeline through its proposed spinoff company, Atlus Midstream. Kinder Morgan and EagleClaw are currently 50-50 partners.

"With the continued growth in drilling activity in the Permian Basin, this project will help to provide key infrastructure for producers to move natural gas to the best premium markets along the Gulf Coast and South Texas," said EagleClaw President Jamie Welch.

The PHP Project will serve as an additional outlet for the increase in natural gas production that links the Permian Basin to the growing markets that stretch across the Texas Gulf Coast.

The project would transport a maximum of 2 billion ft^3/d of natural gas that crosses 430 miles of 42-inch pipeline from the Waha, Texas area to US Gulf Coast and Mexico markets.

Kinder Morgan is also looking at the feasibility of a 48-inch pipeline to increase transportation capacity. 

The project is expected to be in service in late 2020.



Genesis Energy Sells Pipeline Assets as Wyoming Emerges as Newest Big Shale Play

Houston's Genesis Energy is selling its Powder River Basin pipeline assets in Wyoming for $300 million.

With oil companies looking for the next big find, many have turned to the Powder River Basin of Wyoming that offers less congested and cheaper land than in the Permian Basin.  

Genesis is unloading its facilities in what is considered to be the next big emerging shale play in the country. Independent Houston producers such as EOG Resources and Anadarko Petroleum are all expanding in Wyoming.

Genesis is selling its pipeline, rail and oil gathering assets in the Powder River Basin to Dallas-based Silver Creek Midstream, which is looking to grow its Wyoming presence.

Genesis plans to use the cash proceeds to reduce its debt. While Genesis is primarily a pipeline business, it has spent over a billion dollars expanding into the alkali mining business in Wyoming.

Houston Chronicle

Diamondback to Purchase Permian Rivals Energen for $9.2 Billion

U.S. oil and gas producer Diamondback Energy Inc agreed to buy Energen Corp on Tuesday.

The all-stock deal is valued at $9.2 billion and gives Diamondback an expanded footprint in the Permian.

Activist investor group Corvex Management has been pressuring Energen for over a year to sell itself to address weak returns.

The purchase marks the second Permian deal in the span of a week. Diamondback struck a deal to pay $1.2 billion for Ajax Resources LLC.

The purchase brings together two companies with holdings in the same areas of the Permian. Analyst Andrew Dittmar says that this would potentially allow longer horizontal wells as well as share labor and equipment.

The transaction includes $830 million in net debt. Diamondback’s implied offer represents a premium of about 16 percent to Energen’s Tuesday close.

Energen shares rose 9.3 percent in after-market trading, while Diamondback shares fell 5.5 percent.


Targa Resources and Partners to Compete with Kinder Morgan, Plans for 600-Mile Permian Pipeline

Targa Resources, a Houston Pipeline firm, said it would be teaming up with multiple partners to build a 600-mile natural gas pipeline system from West Texas’s Permian Basin to Corpus Christi and Houston regions.

The partnership would put Targa in direct competition with Kinder Morgan and other companies’ massive gas pipelines in the race to build crude oil pipelines and serve the record levels of production from the Permian. Kinder Morgan recently announced plans for a 430-mile Permian Highway Pipeline project to transport natural gas to Houston and Corpus hubs.

Targa said on Friday that its aim is to build the Whistler Pipeline project with Florida’s NextEra Energy, Ohio’s MPLX and some private equity investors as partners.

The project would transport 2 billion cubic feet of gas per day through 42 inch pipelines stretching 450-miles from Waha, Texas to just west of Corpus Christi. A 30-inch pipeline would transport the shipment an additional 170-miles to Wharton County.

Houston Chronicle


Plains All American Hit with $40 Million Tax on Cactus II Steel Import

Plains All American Pipeline (PAA) has been hit with a $40 million tax because of steel tariffs that were enforced under the Trump administration.

The pipeline project will go forward, but Plains' COO has said that the financial impact is worrisome.

“We can’t let trade officials determine product specification for companies. It’s our pipeline, it’s our asset," Plains' COO said.

The COO also told Congress that the material needed to build oil and gas pipelines should be exempt from the steel tariff considering that it only makes up ~5% of the total volume of steel imports.

He also emphasized that steel orders already made should stand, tariff free, at least until U.S. manufacturers are able to build the capability and capacity to deliver timely materials to meet America’s energy production growth.  

The $40 million tax is for high-grade steel from Greece that would be used to build the 585,000 bbl/day Cactus II pipeline. The Cactus II pipeline was one of the main projects meant to alleviate the lack of pipeline capacity problem that the Permian faces.

Plains has already applied to receive exemptions, however the U.S. government denied an exclusion from the tariff.

Seeking Alpha

First Major Pipeline Company Denied Steel Tariff Exemption

The U.S. Administration rejected requests to exempt Plains All American Pipeline’s $1.1 billion Cactus II pipeline in the Permian from the 25-percent tariff on imported steel making Plains All American the first company to have such a rejection to a major project.

According to a Commerce Department decision, the request was denied because there were suitable products available from U.S. steel producers.

The Cactus II pipeline, which initially had a capacity of 585,000 bpd and extended from the Permian to the Corpus Christi/Ingleside area, is one of the major pipelines that was planned as a secure outlet for Permian oil to be alleviated helping capacity constraints. The project is targeted to be operational in the third quarter of 2019.

Originally, material for Plains All American Pipeline was ordered from a Greek producer in December of last year, before President Trump signed on tariffs being enforced on steel and aluminum imports to protect U.S. production and jobs.

Plains All American explained that only three steel mills in the world could manufacture all the material it needed, and none of them were U.S. companies.

Other U.S. companies such as Kinder Morgan, Shell, and Williams Cos have yet to receive news on similar requests, with the U.S. Commerce Department back logged on over 20,000 requests.

Oil Price


Permian Nearing Shut Ins Due to Production Capacity

The Permian is 3 to 4 months from reaching its production capacity and some producers could be forced to shut in wells.

“Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation,” Pioneer’s chairman Scott Sheffield told Bloomberg in an interview outside an OPEC conference in Vienna.

Oil production is the Permian is growing by 800,000 bpd annually, with the current rate of production at 3.3 million bpd. The total capacity is 3.6 million bpd. Producers who don’t have firm pipeline transportation deals will be halted by limits of takeaway capacity.

By July, the Permian pipeline is expected to produce 3.350 million bpd, according to EIA’s latest Drilling productivity Report.

New pipelines are in the progress of being planned and approved, however they are not expected to be up and running before the second half of 2019.

Oil Price

Exxon Mobil, Plains All American Plan Pipeline Project in Permian

Exxon Mobil is planning to build hundred of miles of pipeline in a joint venture with Houston’s Plains All American Pipeline that would stretch from west of Midland to the Houston and Beaumont areas.

The multibillion dollar pipeline network will be designed to deliver crude oil from the Permian Basin to refining and port hubs near Houston.

This news comes after an early 2018 statement by Exxon that said it plans to triple production in the Permian by 2025.

Despite the proposed project, lack of pipelines in the prolific Permian is creating increasing bottlenecks in the area and could hamper growth as well as cause discounts on Permian-produced oil.

With Permian oil production at a record high and rapidly increasing, Plains and Oklahoma-based Magellan Midstream Partners expanded their BridgeTex oil pipeline from West Texas to the Houston region.