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.

Source:
Oil Price

OPEC Decides to Cut Production; Oil Prices Rise

OPEC has put in place a production ceiling for the first time in eight years by deciding to limit its oil output to a range of 32.5 and 33 million barrels per day, a barrel drop of as much as 750,000 from OPEC’s output last month.

Oil prices increased by more than 5% after news of OPEC's cut of oil output on Wednesday.

The group decided to cut production during its talks in Algiers, and they will fine-tune the deal this November, according to delegates informed on the matter.

OPEC’s market management sheds light on promises for not only the Organization of Petroleum Exporting Countries but for the energy industry as a whole, including oil and gas companies both large and small.

The decision also reveals a healing relationship between Saudi Arabia and Iran who have had opposite positions on oil policy for the last two years that caused the extension of uncapped oil production earlier this year.

Despite OPEC’s decision for a production ceiling, analysts predict that the crude market could stay oversupplied for another year or two, unless large producing companies stop flooding the market.

Source:
Fuel Fix
Reuters