A pipeline connecting the Permian Basin to the Eagle Ford in South Texas was canceled last week as the market continued to struggle amid the COVID-19 pandemic.
Enterprise Products Partners announced on September 9 that it would cancel its proposed Pipeline from Midland to Echo 4, which would have had the ability to produce up to 450,000 barrels of oil steadily.
The resolution was intended to reduce Enterprise’s capital expenditures by 2020, 2021 and 2022, and would result in $800 million of expense relief, read in Enterprise’s press release.
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Cancellation is also expected to result in a $45 million impairment rate by the third quarter of 2020, he said.
Announced in October 2019, the assignment planned to connect Enterprise’s 6 million-barrel Midland garage terminal to its ECHO terminal in Eagle Ford Basin and the company’s Houston crude distribution formula with a capacity of more than forty-five million garage barrels connecting each of the refineries. Houston and Beaumont, Texas.
Enterprise CEO Jim Teague said the company is running to improve its monetary position by amending long-term agreements to gradually taper capex growth, to $ 2. 8 billion in 2020, $ 1. 6 billion. million in 2021 and $ 900 million in 2022.
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“We are very proud of our sales team for responding and working with our consumers to replace those long-term agreements,” Teague said.
“This is another example of a company running with its consumers in a ‘win/win’ solution that allows our consumers and the company to allocate more capital in difficult times in the existing business cycle while maintaining long-term volumes and revenues based on fees for our assets. »
The value of the domestic crude oil barrel continued its downward trend on Monday, at around $37 consistent with the barrel, according to knowledge of the Chicago Mercantile Exchange.
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This continued to decline since early September, when the value of oil was around $42 in line with the barrel, but fell below $40 on September 4, according to Nasdaq data.
Oil hit a September low of $36 consistent with the barrel on September 8, falling from a record high of around $43 consistent with the barrel in August, which had recovered particularly from the historic drop below $0 consistent with the barrel in April due to the coronavirus public health crisis and a drop in fuel demand.
Meanwhile, New Mexico’s active oil and fuel platforms also struggled to reach 46 platforms on Friday, according to Baker Hughes’ most recent knowledge, below a platform last week.
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A year ago, Baker Hughes reported that New Mexico had an average of 109 platforms in September 2019.
Texas has noticed a dramatic drop in active platforms over the following year, falling to 106 on Friday from an average of 427 in September 2019.
And the Permian Basin 295 platforms last year, up from 124 this week out of a total of 419 last year.
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Southeastern New Mexico led the basin on active platforms, with Eddy County reporting 25 platforms friday and Lea County reporting 21, according to Baker Hughes’ knowledge.
In Texas, Martin County is third with 19 active platforms, according to records, and Midland County, fourth with 15.
Recent studies suggest that oil production may simply lead to lower costs, as fuel demand has fallen to expected.
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A report through Rystad Energy showed that U. S. crude oil production was in the process of being produced by the US. But it’s not the first time It increased to 9. 2 million barrels according to July, as the company resumed production in the reduced past amid the fitness crisis and market instability.
That figure is only 11% below the maximum production diversity of around 10. 4 million barrels consistent with the day in the last quarter of 2019, according to the report.
Julio saw an accumulation of about 750,000 barrels consistent with the day of production, after developing up to 500,000 barrels consistent with the day of June, according to the report.
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In market reviews reported through Market Watch, Rystad’s head of oil markets, Bjornar Tonhaugen, said that falling to less than $40 per barrel along with higher production may increase investor considerations for the next pandemic wave.
“Losing the $40 mind bar leads investors to wonder how much the fall in oil costs could be at the time of the pandemic,” Bjornar Tonhaugen said in the report. “(Demand) has not recovered to market levels and forecasts are fairly strong for the coming months. “
Adrian Hedden can be reached at 575-628-5516, achedden@currentargus. com or @AdrianHedden on Twitter.