MPLX LP said May 5 it is no longer pursuing a Permian Basin to Gulf Coast NGL pipeline, called BANGL, after a collapse in oil prices and said it will focus on expanding capacity on existing pipelines instead.
The fractionation capacity and export facility associated with the BANGL project have also been deferred.
"We are working with others to optimize existing pipeline capacity ... we are still committed to an NGL solution. It just won't be the original scope that we had envisioned early on," CEO Michael Hennigan said during the quarterly results call with analysts.
"We wanted to not commit to that full scope until we were really sure that the volume commitments would be there [and] with what's happening in the market, the volume commitments are slower."
Global oil demand has crashed about 30% as the coronavirus pandemic has restricted travel around the world and a brief price war between Saudi Arabia and Russia flooded the market with excess supplies.
U.S. crude prices plunged to trade in negative territory for the first time in history last month as storage filled rapidly.
Oil producers in the Permian Basin, the largest shale basin in the country, and in the Bakken have already begun to slash output and curtail drilling in response to the price crash.
Work on the Wink-to-Webster Permian crude oil project, in which MPLX has a 15% equity ownership, is advancing, the company said during its first-quarter results call.
One hundred percent of the contractable capacity on the pipeline system is covered by MVCs (minimum volume commitments) or long-term contracts, a company executive said during the call.
The line is expected to be placed in service in the first half of 2021.
The Whistler natural gas pipeline project, which is expected to transport about 2 Bcf/d of natural gas from Waha, Texas, to the Agua Dulce market in south Texas, also continued to progress, the company said.
The line is expected to start up in the second half of 2021.
The company cut its 2020 capital spending target by more than $700 million to about $1 billion.
Net loss attributable to MPLX was $2.7 billion in first-quarter 2020, compared with net income of $503 million for first-quarter 2019.
Changes would include reducing the amount of time an operator may get an administrative exception to flare natural gas.
Check out the latest oil and gas drilling activity highlights from around the world featured in the August issue of E&P including Equinor’s discovery of a potentially large oil reservoir offshore Canada’s Flemish Pass plus an Alaska wildcat on the North Slope reported by 88 Energy.
Estimated volumes at the Dugong discovery are 40 to 120 million barrels of oil equivalent (MMboe), the company said.