NEW YORK—Enterprise Products Partners LP said on Jan. 30 it will own a 29% undivided joint interest in the Wink-to-Webster crude pipeline system and construction on the segment to Webster, Texas, is expected to be completed by the end of 2020.
The company said its Midland‐to‐ECHO 3 crude pipeline, which will be a part of the Wink-to-Webster system, is expected to be in service in third-quarter 2020.
“I don’t expect more than 200,000 to 300,000 barrels a day (bbl/d) to flow until the Webster leg is complete,” Jim Teague, co-CEO, said on its quarterly earnings call.
The Wink-to-Webster Pipeline System is expected to transport more than 1 million bbl/d of crude oil and condensate from the Permian, the largest U.S. shale basin, to the Gulf Coast.
The project is a joint venture between affiliates of Exxon Mobil Corp, Plains All American Pipeline LP, MPLX LP among others.
Enterprise’s Midland-to-ECHO 4 pipeline is expected to be in service by second-quarter 2021. The system transports crude from Midland, Texas, the heart of the Permian basin, to Enterprise’s ECHO terminal in Houston.
In 2021, Enterprise said it expects to see an increase in crude volumes going through the Midland-to-ECHO pipeline system, saying the pipelines were backed by firm commitments from oil producers.
Midstream companies have raced to add pipeline capacity from the Permian to the Gulf Coast as a shale boom has helped send U.S. crude exports to record highs.
However, the pace of new pipeline projects has slowed as production growth is expected to ease due to producers’ plans to reduce spending on new drilling for a second year in a row in 2020.
Transportation volumes on its Midland-to-ECHO 1 pipeline increased 7% in fourth-quarter 2019 compared to a year earlier. Total crude oil marine terminal volumes rose 38% to 926,000 bbl/d in the fourth quarter compared to 673,000 bbl/d a year earlier, the company said.
The company’s Midland-to-ECHO 2 pipeline, which was converted from NGL to crude service, is likely to remain in crude service for the foreseeable future, a company executive said on the call.
The Anadarko Basin’s Simpson shale formation is being called “one of the biggest yet-to-be-developed shale plays in the United States.”
Unconventional rig count is up 16 units this year, or 2.5%, though activity still remains flat when compared to the 4Q19 average. Last week’s tally fell three rigs to 649 on the basis of modest declines in the Eagle Ford and Permian. Some rebalancing is underway this year with modest recoveries in the Midcontinent after last year’s precipitous two thirds decline in activity. With oil prices now below $50 it appears the 1Q20 average may come in flat with compared to activity levels in the final quarter of 2019.
It costs about $48.19 a barrel to produce oil in Oklahoma’s SCOOP and STACK shale plays, the highest in the United States, according to a Deutsche Bank analysis.