Half of US Pipelines Empty

Overall pipeline capacity utilization in the United States stands at 50 percent. In early 2020 before the pandemic, capacity utilization ranged between 60-70%. According to Reuters, oil and gas shippers often find themselves building pipelines amid a production boom only to find there is too much capacity when downturns occur. Numerous pipelines were built in the Permian in Texas and New Mexico – the largest U.S. oilfield – to export locales while production surged between 2017 and 2020.

According to the same article, “Some pipeline operators in areas like the Permian Basin have responded by cutting pre-pandemic shipping rates, as the U.S. oil industry has been slow to recover from the coronavirus outbreak.” Generally, basins that are overbuilt, like the Permian, have lower uncommitted shipping rates than before the pandemic, but basins with less pipeline capacity have managed to raise rates, because there are fewer shipping options, said Ryan Saxton, head of oil data at Wood Mackenzie.

About half of U.S. oil pipeline space is empty after boom time building spree | Reuters

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