Shortages of pipeline capacity in the U.S. oil patch could put upward pressure on global oil prices as the main source of growth in world oil supply is curtailed. John Kemp reports for Reuters:
U.S. oil production is running into capacity constraints, which are starting to have a material impact on the global availability of crude, causing the market to tighten and putting upward pressure on prices.
The biggest problem is the lack of sufficient pipeline capacity to move oil from shale wells in western Texas and eastern New Mexico to refineries in the Midwest and export terminals on the Gulf Coast.
But production in the Permian Basin has also been constrained by shortages of labour, equipment and materials, which have pushed drilling, pressure pumping and completion costs sharply higher.
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