Javier Blas of Bloomberg reports that a new path to market for Permian Basin shale gas could foil oil producers’ plan to curb output. Blas writes:
Now is the moment when common sense says the US shale industry should be slowing. With oil prices plunging 25% over the last year, you’d expect companies would surely react by cutting drilling. Yet American oil output growth is about to reaccelerate.
The burst of activity would come at an awful time for OPEC+. Saudi Arabia and Russia, which lead the oil cartel, are already wrestling with an oversupplied market, particularly in early 2025. […]
“We kind of even curtailed a little bit of oil to make sure our gas production was a little bit lower in the quarter, which we kind of have continued in the third,” Travis Stice, chairman and chief executive officer of shale producer Diamondback Energy Inc., told investors last month.
As a result, Permian oil production hasn’t grown as much as expected, particularly during the second quarter of this year.
That’s now about to change. Enter the Matterhorn Express Pipeline, a new 580-mile tube running from the Permian into the outskirts of Houston, able to carry a good chunk of the region’s gas ouptut. The new conduit, which will start pumping in the next few weeks, would allow companies to move their gas into the demand centers alongside the US Gulf of Mexico, boosting regional prices. Two other pipelines are expected to come on stream in 2026, and a third in 2027. […]
The Permian activity burst may fade quickly if US oil prices remain below $70 a barrel, as they are now. For oil companies, the beauty of shale is that they can adjust spending quickly to varying market conditions — the opposite of Big Oil’s megaprojects, which take years, if not decades, to build. But, at least for a few months, it could complicate OPEC+’s effort to control the market.
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