Energies Media
  • Magazine
    • Digital Magazine
    • Digital Magazine Archive
  • Features
  • Upstream
  • Midstream
  • Downstream
  • Renewable
    • Solar
    • Wind
    • Hydrogen
    • Nuclear
  • People
  • Events
  • Advertise
  • Contact
No Result
View All Result
Energies Media
No Result
View All Result

Oil Industry Shakeup Looming in the Permian Basin

by Energies Media Staff
August 26, 2019
in News, Oil and Gas News, Press Release, Upstream
Oil Industry Shakeup Looming in the Permian Basin
Myron Bowling

A Critical Mineral at a Critical Moment: The Importance of Restoring Domestic Tungsten Production in the U.S.

A Revolutionary Way to Understand Energy Customers

HOUSTON — Opportunities and Challenges in the Permian, a white paper commissioned by Hastings Equity Partners in partnership with the University of Houston Energy Research, has revealed major industry consolidation looming, a pending bottleneck to meet export demand at the Port of Corpus Christi and an industry challenge to transport the natural gas that is a byproduct of the crude oil extraction process.

In April 2019, the United States became the largest oil producer in the world as a result of increased output in the Permian Basin. Enhanced seismic data gathering capabilities, horizontal drilling, hydraulic fracturing and multi-pad development techniques have allowed operators to realize a cost savings of nearly forty percent to drill and complete a well.

“With the Permian Basin predicted to produce an incremental one million barrels per day each year and the pipeline takeaway issue soon to be resolved with several major new pipelines due to come online in the second half of 2019, Hastings Equity Partners commissioned the University of Houston to find out where the incremental oil is going and to understand the downstream impact that new production levels will have,” said Ted Patton, founder and managing partner of Hastings Equity Partners. “Some facts came out of the research that we didn’t anticipate. Namely, the impact of the industry consolidation in the Permian Basin and the challenge of how to capture and transport the natural gas that is a byproduct of the process.”

InventU
InventU

The research found that major oil operators are projected to produce more than half of the oil in the Permian over the next four years, representing a historic shift in economic power. These large companies are consolidating production, resources and supply chains that will meet the majority of domestic needs. Their acquisitions of acreage in the Permian, as well as ownership stakes in the pipelines and downstream refineries and petrochemical facilities, means that smaller independent producers who traditionally sell to the majors will now need to market internationally and export overseas.

In the early days of this oil revolution, the independent oil and gas companies were nimble and profitable. They acquired leases, assets, and mineral rights with more alacrity than their major counterparts. As the industry matures, major companies like Exxon and Chevron are speeding up production and decreasing margins and pushing out the independents. “The Permian Basin used to be a place where wildcatters reigned and now, with technology, the economy is being driven by manufacturing,” said Patton. Independents are facing new limitations from the investment community to limit production volume to what can be achieved with cash on hand. At the same time, Exxon and Chevron have each announced plans to produce one million barrels a day. “The inevitable result will be consolidation by independents in an effort to survive,” he added.

With major producers owning their own refineries and petrochemical facilities, they no longer need to purchase crude from independent producers. Finding new, foreign customers has become the priority for independents. The findings of the study are clear: independents must combine balance sheets to buy downstream assets, or form a combined marketing organization to sell their product internationally.

“While refineries have increased processing to keep up with production, supply of crude oil will soon outstrip demand and the producers will need to find new customers,” said Dr. Ramanan Krishnamoorti, chief energy officer at the University of Houston and co-author of the research. “Even though there is more than $90B in construction projects for terminals, LNG, refining and petrochemical facilities along the Texas and Louisiana Coast right now, and another $200 billion planned for the next decade, construction can’t keep pace with the supply of oil coming out of the Permian.” The majority of the recent incremental capacity is, and will continue to be, directed at the Port of Corpus Christi.

An existing obstacle forecasted to persist for the next three years is the ability of Very Large Crude Carriers (“VLCC’s”) to navigate Gulf Coast waterways to refill for export. Waterways along the Gulf Coast don’t provide the 75 feet of depth needed to accommodate fully-loaded carriers, requiring ship-to-ship transfers (known as “lightening”) offshore. The demand for U.S. crude has highlighted the need for deep-water terminals off the coast of Freeport, Texas City, Corpus Christi, Brownsville and Louisiana. These projects have been proposed, but permitting and execution permissions will delay progress, thereby creating additional bottlenecks.

While the report presented many challenges being faced by the dynamic oil industry, it also presented emerging opportunities.

As crude production creates more natural gas, the ability to capture, market and deliver it to potential customers will provide new revenue streams from this byproduct for both producers and service providers.

“Commodity service providers will face continued margin erosion in the fact of customer consolidation and ultimately witness the destruction of enterprise value. However, differentiated service providers will thrive as long they are able to demonstrate either cost savings or incremental production for their customers. These companies provide the rigs, pressure pumping equipment, wireline, wellhead, cement, chemicals and delivery services, and the need is not forecasted to diminish,” concluded Patton.

Experience the interactive Multichannel News Release here: https://www.multivu.com/players/English/8585751-hastings-equity-partners-opportunities-challenges-in-the-permian-whitepaper/

About UH Energy
UH Energy is an umbrella for efforts across the University of Houston to position the university as a strategic partner to the energy industry by producing trained workforce, strategic and technical leadership, and research and development for needed innovations and new technologies.

About Hastings Equity Partners
Hastings Equity Partners is a private equity firm focused on investing in lower, middle-market energy and industrial service businesses. Hastings’ approach is to leverage the extensive operational experience of the firm’s managers and investors, many of whom are active or former CEOs of Fortune 1000 companies. In addition, due to the firm’s expanding portfolio of industrial services companies, it is able to share best practices, technology trends and contacts across its platform to ensure that all of its investments benefit. Hastings strives to help its portfolio companies create sustained value for their employees, customers and investment partners.

Author Profile
Energies Media Staff
Website
Author Articles
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    Drones
    September 8, 2025
    Revolutionizing Renewable Energy with Advanced Drone Technology
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    Global Shale Oil and Gas Landscape Set for Growth Beyond US
    August 26, 2025
    Global Shale Oil and Gas Landscape Set for Growth Beyond US
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    E-Fuels
    August 13, 2025
    2nd Annual World E-Fuels Summit
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    What Happens to Solar and Wind Systems During Natural Disasters?
    August 6, 2025
    What Happens to Solar and Wind Systems During Natural Disasters?
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    ship on body of water at night
    August 1, 2025
    Industry leaders to speak at Wood Mackenzie’s Carbon Capture, Utilization and Storage Conference 2025
  • Energies Media Staff
    https://energiesmedia.com/author/oilmanwp/
    ROGII and NRGX Technologies Ltd. Partner to Deliver Seamless LAS Data Integration for Upstream Workflows
    July 31, 2025
    ROGII and NRGX Technologies Ltd. Partner to Deliver Seamless LAS Data Integration for Upstream Workflows
BIO
ADIPEC

In This Issue

Energies Media Summer 2025

ENERGIES Media (Summer 2025)


Bringing Safety Forward in Offshore Operations


Letter from the Managing Editor (Summer 2025)


U.S. Oil Refineries Face Critical Capacity Test Amid Rising Demand


How to Deploy Next-Gen Energy Savers Without Disrupting Operations


Energies Media Interactive Crossword Puzzle – Summer 2025


The Hidden Value in Waste Oil: A Sustainable Solution for the Future


Moving Energy Across Space and Time


ENERGIES Cartoon (Summer 2025)


Why Energy Companies Need a CX Revolution


NeverNude Coveralls: A Practical Solution for Everyday Dignity


Dewey Follett Bartlett, Jr.: Tulsa’s Champion of Independents


Meeting Emergency Preparedness and Response Criteria


Maximizing Clean Energy Tax Credits Under the Inflation Reduction Act

E-Fuels
Expo
  • Terms
  • Privacy

© 2025 by Energies Media

No Result
View All Result
  • Magazine
    • Digital Magazine
    • Digital Magazine Archive
  • Features
  • Upstream
  • Midstream
  • Downstream
  • Renewable
    • Solar
    • Wind
    • Hydrogen
    • Nuclear
  • People
  • Events
  • Advertise
  • Contact

© 2025 by Energies Media