Plains All American Pipeline, one of the largest US midstream companies, expects commercial oil storage in the US to fill by mid-May as demand has plummeted because of efforts to fight the Covid-19 pandemic.
Plains expects US refinery demand for crude will decline by at least 30pc, or about 5mn b/d, and crude exports will drop by 1mn b/d, according to a filing yesterday to the Texas Railroad Commission, the state’s primary oil and gas regulator. Plains made the estimates in late March.
The Texas Railroad Commission is planning a virtual hearing on 14 April to discuss curtailing the state’s oil production to help balance the market in the wake of the crash in crude prices and a sharp drop in demand because of the coronavirus.
Plains’ letter to the commission was meant to inform regulators of current market conditions and did not specify whether the company supports a statewide curtailment.
Plains asked producer customers last month to proactively manage their exposure by taking steps to reduce or curtail production “in a manner that was best suited for their assets rather than waiting for storage capacity to be filled and being forced to shut-in production.”
Plains Marketing buys about 900,000 b/d in the Permian Basin.
The Texas Railroad Commission meeting is in response to a request by two shale producers, Pioneer Natural Resources and Parsley Energy who said that current “extraordinary circumstances” have caused “the largest imbalance in history” in global supply and demand.
ExxonMobil and Occidental have come out strongly against the idea of Texas oil production cuts, as have several business groups including the Texas Association of Business and the Texas Association of Manufacturers.
Meanwhile, some smaller producers have filed in favor of a curtailment.
Plains said earlier this week it is cutting capital expenditures for 2020-21 by one third, or $750mn, the latest US midstream company to pull back spending in response to the crashing oil prices and the Covid-19 pandemic.
By Eunice Bridges
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