Texas will need to add more than 10,000 miles of new, currently unplanned, pipeline infrastructure projects in the next 30-plus years to achieve its full potential for growth of oil and gas production, a new study finds.
The study, by IHS Markit, predicts that gas production from three major Texas producing regions - the Permian Basin, the Eagle Ford Shale and the Barnett -- will peak in the 2030 timeframe at just under 35 Bcf/d and begin to gradually decline to around 30 Bcf/d by 2150.
However, this projected growth is contingent on the construction of sufficient pipeline infrastructure, including projects that are planned or currently under construction, as well as future projects not yet on the books.
Without the construction of future incremental pipeline infrastructure the study's authors estimate Texas' production of natural gas will be 24% lower than in the infrastructure buildout scenario, while crude production would be 9% lower, and natural gas liquids production would be 8% lower than projected.
In comparing historic production with its five-year production forecast, Platts Analytics found that in the last decade total Texas gas production grew by more than 1 Bcf/d from 18.6 Bcf/d in 2010 to 19.7 Bcf/d last year. Production over the next five years is expected to continue ramping up to 24 Bcf/d in 2024, according to Platts Analytics data.
The study projects that by 2050, in addition to pipeline projects planned or under construction, about 20 new projects with total mileage of about 10,950 miles, will have to be built to accommodate the expected hydrocarbon production growth over that time period. Of these, about 47% would be oil projects, while 29% would carry gas and 24% NGLs.
Todd Staples, president of the Texas Oil and Gas Association, said much of the new infrastructure construction will need to take place in the Permian Basin, driven by the expected growth of crude oil production, as well as the additional natural gas and NGL production associated with it.
"Most of the gas produced in the Permian is produced in association with oil production," Staples said in an interview Monday.
PERMIAN OIL, GAS, NGL PRODUCTION TO GROW
The study predicts Permian oil production to grow from a 2017 average of about 2.5 million b/d to about 5.5 million b/d by the mid-2020s. Meanwhile Permian natural gas production is expected to increase to approximately 24 Bcf/d by 2030, while Permian NGL production is expected to expand to almost 2.2 million b/d by 2040.
In addition to the pipeline infrastructure that needs to be built to move the oil, gas and NGLs from the Permian Basin, industry players also will need to build additional infrastructure on the other end of the pipe, particularly in the Gulf Coast region, Staples said.
"You're going have to have a volume of infrastructure to meet the needs of the growing manufacturing sector," he said. Processing plants and refineries will need to be built or expanded, as will the ports needed to move these products across the globe, he said.
Staples said that while the oil and gas industry would shoulder the load of building out the needed capacity "we need public policy that's in place that allows the infrastructure to be built that is essential to the growth of our state."
