HOUSTON (Reuters) - The operators of two new pipelines in West Texas shale fields are offering discounted prices to attract shippers accustomed to high fees to move oil to export hubs, according to the pipeline companies and federal filings.
These bargain rates, in one case half the initial published rate, will aid strapped oil producers that once had to sell their oil for about $10 less per barrel because of transport constraints to move their oil from the largest shale oil field in the country.
But pipeline companies, which have in the past year raced to add new capacity to flow oil from the Permian Basin to the refining and export hub on U.S. Gulf Coast, will face pressure to cut rates in coming weeks, said oil traders and analysts.
The two operators - EPIC Midstream and Plains All American (PAA.N) - are opening lines that combined will in coming months be able to carry about 1.6 million barrels of oil per day (bpd) from West Texas to the Gulf Coast.
A third line, the 900,000 bpd line being developed by Phillips 66 (PSX.N), will open later this year that will boost total capacity to flow oil from the region by two-thirds.
“There’s no way another 2.5 million bpd are waiting to get sent to Corpus Christi (Texas),” said Sandy Fielden, an analyst at Morningstar. “Clearly, there’s going to be too much capacity ... There will be buying up of barrels in Midland like it’s going out of style.”
Rates for most Permian pipelines have ranged between $4 a barrel and $7 a barrel for the past year because
