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Permian oil faces shut ins on pipe shortage

The biggest U.S. shale region will have to shut wells within four months because there aren’t enough pipelines to get the oil to customers, the head of one of the industry’s largest producers said.


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The worsening bottleneck in the Permian region that straddles west Texas and New Mexico offers an unexpected fillip to OPEC and other oil producers outside the U.S., who’ve seen rampant production from America’s shale producers grab market share.

“We will reach capacity in the next 3 to 4 months,” Scott Sheffield, the chairman of Pioneer Natural Resources Co. said in an interview at an OPEC conference in Vienna. “Some companies will have to shut in production, some companies will move rigs away, and some companies will be able to continue growing because they have firm transportation.”


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His comments are the strongest indication yet that the growth in the red-hot shale region is about to slow down soon due to a lack of pipeline capacity. The problem has grown so bad that oil companies have been forced to load crude on to trucks and drive it hundreds of miles to pipelines in other parts of the state. [read more]

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