The number of pipeline and storage terminal projects proposed to move shale to the U.S. Gulf Coast has dwindled amid steps by oil producers to pare exploration spending.

Last year, booming West Texas production overwhelmed existing pipelines out of the Permian Basin region, sinking local prices and helping launch nine projects proposing to add 5.4 million barrels per day (bbl/d) through the first half of 2021.

On March 25, Magellan Midstream Partners LP cut its capital spending outlook by $450 million over two years, saying the proposed Permian Gulf Coast pipeline was unlikely to proceed.

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The project, proposed with partners including Delek US Holdings Inc., would have carried up to 1 million bbl/d to the Gulf Coast. Its proposed mid-2020 start lagged behind other projects and as shale producers pare drilling outlays. Delek on March 25 also shifted its stance on the joint venture, deleting a reference to the venture in an investor presentation.

"A winnowing process of sorts has been occurring, with some projects advancing and others falling to the wayside," said John Zanner, an analyst at consultancy RBN Energy, in a blog post this week.

The same day that Magellan ended its project, Schlumberger Ltd.'s CEO forecast North American onshore spending will decline more than 10% this year.

Kinder Morgan Inc. also this week exited an $800 million deepwater terminal project off Freeport, Texas, selling its stake to project leader Canada's Enbridge Inc., which continues to pursue the terminal. Kinder said the project no longer fit its strategic priorities.

There are eight proposed oil-export terminals for the U.S. Gulf Coast. If all eight were built, they would have capacity to export a combined 12.5 million bbl/d, more oil per day than the U.S. produced in the week ended March 15, according to the U.S. Energy Information Administration.

"The volume of projects is clearly too much for the short term," said Sandy Fielden, analyst at equity researcher Morningstar Inc.

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Magellan said despite canceling its Permian Basin to Gulf Coast pipeline, it hopes to develop a smaller pipeline that would carry 350,000 bbl/d from West Texas to a point outside Corpus Christi in South Texas.

"The probability of its success is unknown at this time," Magellan spokesman Bruce Heine said in an email.

Onshore