"Wellhead to the World" is a corporate strategy, JupiterMLP CEO Thomas Ramsey said, that applies not only to assets the company is currently working on but also to its future endeavors as it continues to build its asset base.
"Everyone talks about production growth being strong, and 2019, by everybody's measure, is going to be a really strong year," Ramsey said. "I think you are going to see a lot of barrels per day of new production through the end of the year."
Ramsey noted this strong production growth, particularly growth spurred by increased activity stemming from the Permian Basin, necessitates the building of new infrastructure to accommodate the increase in Gulf Coast product.
"Infrastructure is under some stress, so this is going to continue to make that a really tough time until new infrastructure starts," he said. "We are going to be railing, we are going to be trucking ⦠to make the crude move."
Analysts' estimates of the potential abundance coming from the Permian make planning new infrastructure a difficult proposition.
"When you look at later years, it could be a 10-million-barrel-a-day sort of play," Ramsey said. "Some people have said it's going to six or eight or nine. We don't know the real peak, but it's a big number versus where we're at today. So obviously a lot of infrastructure needs to get built pretty soon if we're going to ever be able to handle all this volume that should come on."
In a panel discussion focusing on future capacity infrastructure plans and projects for midstream growth for crude, natural gas and hydrocarbons gas liquids (HGL) at the Permian Midstream Takeaway Capacity and Infrastructure Congress held recently in Houston, Ramsey noted that, in addition to new projects being launched, existing pipeline infrastructure is currently expanding to accommodate more volume.
Construction to begin on Jupiter Pipeline
"There is some incremental capacity that will come on the next year or so that will relieve pressure for a period, but I think that pressure relief will only last a month or two, maybe three, as that capacity gets taken up," Ramsey projected, adding that, despite expansion, existing infrastructure is currently experiencing a bottleneck.
Ramsey pointed to Epic Pipeline as an example of new build, a 700-mile pipeline stretching to ship crude from the Permian to Corpus Christi, Texas, which is expected to be operational in late 2019.
"That could be significant relief if there's a way to continue to load at the speed that they can transport," Ramsey said. "Back to the bottleneck: If this pipe ends up at being 700,000 barrels a day, being able to offload 700,000 barrels a day in Corpus Christi may or may not be possible at the same time. We'll see how that timing lines up."
In late 2018, Jupiter announced construction would begin in 2019 on its Jupiter Pipeline, a 650-mile, 36-inch-diameter crude oil pipeline with origination points near Crane, Texas, and Gardendale/Three Rivers, Texas, and an offtake point in Brownsville, Texas.
"It's our plan to be operational in the fourth quarter of 2020," Ramsey said.
The port at Brownsville, Ramsey explained, offers a similar depth and essentially the same vessels that can be loaded in Houston or Corpus Christi.
"Could it load a million barrels a day, as is? No," Ramsey said. "There's other infrastructure needed at the port, as well as some offshore infrastructure."
"It's really going to be interesting to see, with these new pipelines, how long the relief is and when we'll hit the bottleneck again," Ramsey concluded. "I think we're going to continually see the bottleneck hit, whether it's in Midland or at the Gulf Coast with all the VLCC (very large crude carrier) loading facilities available."
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