| Be Ready Tomorrow Afternoon! | Julia Guth here, CEO and Executive Publisher of The Oxford Club. Tomorrow is the event we've all been waiting for - the all-access interview with former Speaker of the House Newt Gingrich and award-winning biotech investment expert Marc Lichtenfeld.
Don't miss out on your chance to get a complete look at the biggest medical breakthrough - and profit opportunity - of your lifetime. You'll find out how it could solve America's healthcare crisis AND send five companies soaring 1,000%-plus in the coming months. The 2019 American Health & Wealth Summit goes live tomorrow at 1 p.m. It's free and can be streamed online from wherever is most convenient for you. I'm confident that it will be the most valuable event you attend all year. Details here. | | | | |
 | | | Pipeline Plays Offer Less Risk, More Reward | | David Fessler | Energy and Infrastructure Strategist | The Oxford Club | | | | | Up until about five years ago, the Texas economy suffered from the roller-coaster, boom-and-bust nature of the oil sector. When crude prices were high, everything was good. But when crude tanked, Texas practically shut down.
When oil prices crashed five years ago, more than 100 exploration and production (E&P) companies went belly up. The world was awash in crude. Prices were stuck between $40 and $50.
But there was one basin in the U.S. that kept pumping out oil: the Permian.
New technology, combined with an oil formation unlike any other, assured Texans they wouldn't suffer any more difficult times. And today the Permian Basin is the world's largest producing oil field.
Now Texans have a new problem: There's simply not enough pipeline takeaway and storage capacity.
Thankfully there are a number of new pipeline and storage projects underway to support this increased production. | | | Coming Down the Pipeline
New fracking technology combined with enhanced oil recovery techniques means more oil is coming out of the Permian every day.
E&P companies are producing oil and natural gas from well depths ranging from a few hundred feet to 5 miles.
Exxon Mobil Corporation (NYSE: XOM) plans to increase its Permian production to more than 1 million barrels per day (bpd) by 2024. That's an 80% increase from what it's producing now.
And Chevron Corporation (NYSE: CVX) expects to hit 900,000 bpd by 2023.
But where is it all going? That's where pipeline companies come in...
Plains All American Pipeline LP (NYSE: PAA) is building the Cactus II System. In fact, its initial 585,000 bpd capacity is already spoken for.
The Epic Crude Oil Pipeline will service the Permian and Eagle Ford formations. Its initial capacity will be 590,000 bpd when it's up and running between now and the end of the year.
Phillips 66 Partners LP (NYSE: PSXP) is building the 900,000 bpd Gray Oak Pipeline. It will run 850 miles when it's finished this year, connecting the Permian with Gulf Coast refineries.
And those are just a few off the list.
The Other Part of the Puzzle
Cushing, Oklahoma, is the oil storage capital of North America. Through various pipelines, Cushing receives millions of barrels of crude from E&P companies every day.
And it sends millions of barrels to refiners every day as well. Its overall storage capacity is 94 million barrels... and counting.
That's roughly enough capacity to supply global demand for one day. But with Permian production on the rise for the foreseeable future, 94 million barrels won't be enough.
The aforementioned pipelines will bring another 2 million bpd of crude from the Permian to Gulf Coast export terminals and Cushing storage facilities.
That creates a problem for Permian Basin oil.
Oil companies, in their rush to build new Permian pipeline takeaway capacity, forgot about adding more storage in Cushing and more export docks in Corpus Christi, Texas.
As a result, the spread between Permian (also known as Midland) crude and Brent crude could hit between $9 and $14 next year.
That'd be good news for pipeline companies.
They get paid on volume, regardless of oil prices. So I think it'd be smart for investors to have some pipeline operators in their energy portfolios.
Good investing,
Dave | | | | |  | | | | | |  |  | | | | Matthew Carr | July 16, 2019 We dug a little deeper into the bifurcated returns of pot stocks in 2019 and pulled together the best and worst performers so far this year. Read More | | | | |  | | | | Matthew Carr | July 15, 2019 An investigation into CannTrust Holdings uncovered unauthorized growing activity... and started the company's tragic fall from grace. Read More | | | | |  | | | | Matthew Carr | July 13, 2019 The "Christmas in July" craze has become so huge that every retailer is now rushing to cash in on the summer fun. Read More | | | | | | | | | | |
|
The Oxford Club is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that although our track record is highly rated by an independent analysis and has been legally reviewed, investment markets have inherent risks and there can be no guarantee of future profits. The stated returns may also include option trades. 
No comments:
Post a Comment