Severe Infrastructure Issues Stall Shale Surge

While oil and gas rig placement and production continue ramping up in West Texas and other areas, getting that crude and gas from field, to port, to export is another matter. An outdated infrastructure is stalling the shale surge, impacting the industry’s ability to keep up with worldwide demand. A recent article in Bloomberg indicated that, as a result, U.S. producers are forced to take a $9-a-barrel price discount to international crude.

The problem, according Barclays Plc and Raymond James & Associates, is a lack of pipeline capacity, partly in the Permian Basin, and partly near a key Oklahoma storage hub. Also exacerbating issues in the Permian are a tight labor market for drivers, and competition for trucks needed to deliver materials for racking operations.

Nor are pipelines the only issue. The U.S. has only one export terminal that can accommodate the 2 million-barrel supertankers that Asian and European customers prefer.

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