If you build it, will they come? Assessing the need for additional Permian crude pipeline investment

Crude production growth is grinding higher in the Permian once again, putting the basin in the driver's seat and leading overall US L48 production higher. However, a hangover from the last build-out boom is still emanating in the midstream segment of the Permian value chain. Amidst record excess capacity and ultra-tight differentials, a spectrum of views has emerged from pipeline owners on the future midstream investment needs in the basin. Some pipeline owners have even gone so far as considering capacity rationalization and conversion in the current hyper-competitive midstream environment. We forecast Permian production to continue moving higher for the better part of this decade and see a clear need for additional midstream investment. In this Insight, we address the questions: how much crude egress capacity will the Permian need, what efficient brownfield options exist, and will there be sufficient demand for capacity to justify greenfield investment?