Commodity Market Report
North America Crude Markets long-term outlook: H2 2019
Report summary
Is the great North American midstream arms race reaching a pinnacle? The race has been on over the last decade from the midstream space to keep pace with feverish L48 upstream supply growth. Over the last decade North America regional price differentials have been volatile as the midstream sector has failed to keep pace. That dynamic is teetering on flipping. Investor appetite for endless shale volume growth and capital deployment is rapidly throttling down. The crude value chain is on the precipice of regime change. Broadly the L48 crude machine will see shifting economic capture from the midstream space to upstream as the dynamic shifts from barrels competing for pipeline space, to pipelines competing for barrels. The great midstream buildout appears near an end, and new themes of asset and portfolio optimization will take center stage over mammoth greenfield FIDs.
Table of contents
- L48 Production outlook
- Cost of supply: as low as it goes
- Heavier reliance from less commercial plays and reserves growth
- Bakken infrastructure and pricing: Production declines in 2020s drive excess capacity both locally and in key Rockies hubs
- Rockies infrastructure and pricing: resilient regional production no match for declining Bakken volumes driving significant excess pipeline capacity in 2030s
- Cushing infrastructure and pricing: Need for one more pipeline expansion?
- Western Canada infrastructure and pricing: Broader North American infrastructure needs hinge on TMX
- Permian infrastructure and pricing: The aftermath of a midstream overbuild
- US crude export volume and infrastructure outlook: The arms race moves offshore
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