The US Has So Many Oil Pipelines, Half of Them Are Empty
By: Gizmodo
S E E D E D C O N T E N T
ByMolly TaftThursday 12:50PMComments (7)Alerts Unused pipes near Blanco, TX., in 2019.Photo: Eric Gay (AP)
If you're in the market for an oil pipeline, you're in luck—we've got a lot of extra ones right now. About half of the oil pipelines in the U.S. are sitting unused, energy research firm Wood Mackenzie said in figures shared with Reuters Thursday. The situation reflects a downturn in oil production that was kicked off by the pandemic.
Oil production, like a lot of other supply chain functions, isn't an exact science; there's usually a push-and-pull dynamic between production and pipelines as supply ebbs and flows. In early 2020, when U.S. oil production was still relatively high, somewhere between 30 and 40% of the nation's pipelines were sitting unused, Wood Mackenzie reported. However, the fall in output as a result of covid-19, when demand was so low that oil prices briefly dipped into the negative, was so precipitous that the ratio of unused pipelines to oil output is really out of the ordinary right now.
Part of this incredible drop-off is thanks to the oil boom that preceded the pandemic. Between 2017 and 2020, operators scrambled to build more pipelines as a sharp increase in oil production in Texas' Permian Basin caused transport bottlenecks and threatened to overwhelm the existing infrastructure. This was the cherry on top of a 15-year rush in American oil production unlike any other in history.
"The shale boom has been unprecedented in its size and the rate of production growth," said Lorne Stockman, a director at Oil Change International. "Especially with the Permian, to my knowledge, there's never been an oil basin or a plain that has grown so much, so fast."
Another contributing factor to the pipeline building frenzy is the simple fact that Texas loves to encourage oil and gas production and puts very few guardrails in place. "There weren't any huge regulatory hurdles to get over to get a pipeline built," said Stockman. "You almost don't need a permit to build them."
The ghost network of pipelines has been a concern in the Permian 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 major pipeline operating companies, which previously had faced a huge glut of business. These operators include big names like Energy Transfer Partners, which owns the Dakota Access Pipeline. The Wood Mackenzie report notes that the Dakota Access Pipeline is only running at 77% of its usual capacity, compared to 100% before the pandemic. Plains All-American Pipeline is another biggie; the company tried (and failed) to build a pipeline through a majority-Black neighborhood in Memphis this year, and is pushing to replace a California pipeline that shut down in 2015 after a major oil spill.
Pipeline operators and those supporting the fossil fuel industry like to use language about how pipelines are necessary to serve the nation; the idea of pipelines having a "public interest," Stockman said, is often used in eminent domain cases where companies are trying to make a case for building pipelines on private land. Permitting agencies often parrot that language when allowing projects to move forward. Meanwhile, pipelines and other fossil fuel infrastructure have been "dubbed" critical, allowing conservative lawmakers to pass extreme policies to protect them from protesters.
But the excess pipelines in the Permian right now show that a lot of American oil and gas infrastructure is built not out of some noble drive to serve the energy needs of a nation, but because fossil fuel companies are looking for the best bang for their buck.
"You then see, actually, there's overbuild," Stockman said. "This is not about meeting demand—it's about companies being able to make more money by having choices about where they can send their oil."
It's easy to blame covid-19 for the sharp drop in fossil fuel production and pipelines lying unused. Even with omicron, there's also perhaps an expectation that production will pick back up again at some point. But the story of American oil production isn't so simple.
Global forces like OPEC are keeping their reins on production tight to control prices, while American investors—many of whom lost money during the shale boom because the sheer amount of oil being produced made prices bottom out—are pressuring U.S. producers to keep production down. Meanwhile, the global energy transition is looming, as the world begins to recognize the urgency of stopping fossil fuel production. It remains to be seen whether those abandoned pipelines in the Permian will stay empty—or if fossil fuel interests will get their way and find another way to put them to use.
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But but Keystone.
Exactly.
Wouldn't it be great to have the Keystone and it being empty, ah the dream of energy independence with Canandian air..LOL
I cannot believe that people still think it is the US's line.
We do have some morons on NT that have said it..LMAO
I know - I about came unglued when some moron on the radio said something about how the pipeline should be opened so the US will have enough crude.... total asswipe. I refuse to listen to him anymore & told the station I won't listen anymore. They sent me a t-shirt.
My neighbor does.
You might want to show him a map..Naw, as stupid as he is a map you be way beyond his pay grade.
I have 3 nephews in the oil business, all in upper management, with one concerning pipelines. he told me that keystone was totally unnecessary, a PR disaster, and would only benefit the politically connected wealthy investors. big surprise.
without a doubt it was. The expansion of two other lines meant that both will carry more oil then a newly constructed Keystone.
Plus that little thingy of 50% of the pipelines are empty.
It's never made sense to build a pipeline instead of a refinery. They're already sending tar sands crude to refineries over 1600 miles away as the crow flies. The litigation alone has to have eaten a lot of capitol that could have been invested in export refineries. It looks like Canada is having the same pushback from their environmentalist as they got here.
on a number of occasions they have stopped pipelines to the WC of Canada. Most in Canada don't want what we are importing here.
Some in the US should actually pay some attention to this, but that is wishful thinking.
I know which begs the question, why do they keep mining that garbage?
Money