The US has so many oil pipelines, half of them empty

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Unused pipes near Blanca, TX, 2019.

Unused pipes near Blanca, TX, 2019.
Photography: Eric Gay (AP)

If you are in the pipeline market, you are in luck – we are many of additional currently. About half of U.S. oil pipelines remain unused, said energy research firm Wood Mackenzie. figures shared with Reuters Thursday. The situation reflects the decline in oil production triggered by a pandemic.

Oil production, like many other supply chain functions, is not an exact science; there is usually a push-and-pull dynamic between production and the pipeline as supply declines and flows. In early 2020, when U.S. oil production was still relatively high, somewhere between 30 and 40% of national pipelines remained unused, Wood Mackenzie reported. However, the decline in production as a result of covid-19, when demand was so low that oil prices briefly fell to a negative value, was so sharp that the ratio of unused pipelines to oil production really currently uncommon.

Part of this incredible decline is thanks to the oil boom that preceded the pandemic. Between 2017 and 2020, operators struggled to build more pipelines as well a sharp increase in oil production in Texas Permian Basin caused transport bottlenecks and threatened to overload the existing infrastructure. This was a cherry on top of a 15-year surge in U.S. oil production unlike any other in history.

“The shale boom was unprecedented in its size and production growth rate,” said Lorne Stockman, director of Oil Change International. “Especially with perm, as far as I know, there has never been an oil basin or a plain that has grown so much, so fast.”

Another factor contributing to the madness around pipeline construction is the simple fact that Texas likes to stimulate oil and gas production and puts up very few protective fences. “There were no major regulatory hurdles to cross to build the pipeline,” Stockman said. “You almost don’t need a permit to build them.”

The ghost pipeline network has been a concern in Perm for most of the pandemic. Last year, the Wall Street Journal reported that the slowdown in production was bad news for some of the country’s largest oil pipeline management companies, which had previously faced a large business overcrowding. These operators include big names like Energy Transfer Partners, which owns the Dakota Access Pipeline. A Wood Mackenzie report states that the Dakota access pipeline is operating at only 77% of its normal capacity, compared to 100% before the pandemic. Plains All-American Pipeline is another great thing; the company tried (and failed) to build a pipeline through the majority black neighborhood in Memphis this year, and pushing to replace California gas pipeline that closed in 2015 after a major oil spill.

Pipeline operators and those who support the fossil fuel industry like to talk about what the pipelines are like necessary for serving the nation; The idea of ​​pipelines having a “public interest,” Stockman said, is often used in cases of eminent domains in which companies try to make arguments for building pipelines on private land. Licensing agencies often repeat that language when they allow projects to move forward. Meanwhile, pipelines and other fossil fuel infrastructure “named” are critical, allowing conservative lawmakers to declare extreme politics to protect them from protesters.

But the surplus of Perm pipelines right now shows that much of America’s oil and gas infrastructure is built not out of some noble instinct to serve the nation’s energy needs, but because fossil fuel companies are looking for the best shot for their money.

“Then you see, in fact, there’s over-construction,” Stockman said. “It’s not about meeting demand – it’s about companies being able to make more money by choosing where to send their oil.”

IIt is easy to blame covid-19 for the sharp decline in the production of fossil fuels and pipelines that lie unused. Even with omicron, production may also be expected to restart at some point. But the story of American oil production is not so simple.

Global forces like OPEC are holding the reins of production firmly to control prices, while U.S. investors – many of whom lost money during the shale boom because the sheer volume of oil produced led to falling prices – are putting pressure on U.S. producers to keep production low. Meanwhile, a global energy transition is looming as the world begins to recognize urgency stopping the production of fossil fuels. It remains to be seen whether these abandoned pipelines in Perm will remain empty – or whether the interests of fossil fuels will come into their own and find another way to use them.

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