Just two years ago, in response to booming domestic demand and insufficient pipeline capacity to move the oil to market, pipeline operators began building more pipelines in the prolific Permian Basin of Texas and New Mexico, capable of transporting up to seven mbd of fracked shale oil.  Today, in the wake of the Covic pandemic and the corresponding precipitous drop in demand, the area has an abundance of pipelines — a welcome change for shale oil companies but one now squeezing pipeline operators’ profits.

Permian Basin oil and gas pipeline construction (copyright by Shutterstock/G B Hart)

“We are going to need significant consolidation in the midstream space overall, and particularly in these basins where the oversupply is as dramatic as it is,” Tyler Rosenlicht, a portfolio manager at investment firm Cohen & Steers Inc., said of the pipeline companies.

Read more: http://www.pipeline-journal.net/news/too-many-pipelines-too-little-demand

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