ExxonMobil seeks shippers for Permian Basin pipeline, oil prices surge after attacks
A major oil and gas company in the Permian Basin announced an open season for shippers of crude oil looking to move product from southeast New Mexico into West Texas, and then to the export market in the Gulf Coast.
ExxonMobil’s Delaware Connector pipeline was designed to carry 480,000 barrels of crude oil and condensate per day from production areas in Eddy County, to the company’s terminal in Wink, Texas.
Those interested have the option of tying into the pipeline, which was under construction and expected to go into service by the end of 2020.
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The binding open season was scheduled to run from Sept. 13 to Oct. 14, read a news release from ExxonMobil.
The 65-mile pipeline was intended to support ongoing production growth in the Permian Basin with access to Gulf Coast refineries.
From the Wink Terminal, crude oil can be piped, trucked or shipped via rail to the Gulf Coast.
That terminal was permitted to handled about 100,000 barrels of oil per day, records show.
In developing its path for the Delaware Connector, ExxonMobil said it considered the impact to landowners, aiming to use existing utility infrastructure and avoid construction in highly-populated areas.
“We are committed to being a safe and responsible neighbor in the communities in which we operate,” read a statement from ExxonMobil.
“We carefully consider many community factors to determine a pipeline route, and, where possible, will use existing utility and pipeline corridors and avoid population centers, environmentally sensitive or culturally significant area.
“And, regulatory permits for the new Delaware Connector common carrier pipeline require that we assess and consider landowner, environmental and cultural site sensitivities in pipeline route development.”
Oil prices grow as U.S. threatens move away from Middle East crude
The price of domestic oil hit one of its highest points all year, with West Texas Intermediate – a grade of crude used as a benchmark for U.S. prices – was trading at about $62 per barrel as of Monday.
That was the highest since mid-May saw a price of $63 per barrels, recovering from 2019’s peak at about $66.
Since the spring, prices fluctuated sporadically in the $50-to-$60 range, bottoming out at $51 in June and August.
July saw a peak of about $63 per barrel, the highest rate all summer before a dramatic slip back down to $55.
The recent spike was brought on by violence in the Middle East, as Saudi Arabian oil facilities were attacked by Houthi rebels, read a report from Enverus, previously known as Drillinginfo.
The attacks saw the lost of about 5.7 million barrels per day of capacity, half the country’s total output.
Saudi Aramco, the country’s oil company, planned to restore up to 2 million barrels per day on Monday, but the incident saw the price of WTI shoot up 10 percent over the weekend.
The U.S. blamed Iran for the attack, as that country backs and President Donald Trump used the incident to tout his desire for the country to be energy independent.
The U.S. also announced it would tap into its Strategic Petroleum Reserve, for a yet-to-announced quantity of oil in an attempt to subsidize the loss from the attacks, while also moving to bolster the development of pipelines in America.
“Based on the attack on Saudi Arabia, which may have an impact on oil prices, I have authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied,” Trump tweeted.
“I have also informed all appropriate agencies to expedite approvals of the oil pipelines currently in the permitting process in Texas and various other States.”
Trump tweeted that the U.S. was ready for military action once Iran’s role in the attacks was verified.
“Saudi Arabia oil supply was attacked. There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed,” Trump tweeted.
“PLENTY OF OIL!”
Such global tensions could threaten the international market, read the report, as instability appeared to intensify in the region.
“The fact that the United States is blaming Iran (which is backing the Houthis in Yemen) for the attack also raises the prospect of US airstrikes,” the report read. “In short, geopolitical risk is back.”
More oil and gas news:
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- U.S. Sen. Tom Udall mounts opposition to EPA's cuts to oil and gas methane rules
- State, oil and gas industry question reports of under-reported fracking in Permian Basin
- Oil and gas methane waste debated at Carlsbad public hearing, State prepares tougher rules
- Southeast New Mexico lizard threatened by oil and gas operations, litigation possible
Adrian Hedden can be reached at 575-628-5516, email@example.com or @AdrianHedden on Twitter.