US steel tariffs, the trade war with China and a prolonged federal government shutdown could each threaten to slow the growth of the US oil and natural gas industry, the president of the American Petroleum Institute said Tuesday. API President and CEO Mike Sommers said “there’s no question” the 25% tariff imposed on steel imports in 2018 has prolonged the Permian Basin’s pipeline constraints.
S&P Global Platts Analytics expects the Permian’s inventory of drilled-but-uncompleted wells to slowly build through 2019, but higher prices and new pipelines in the second half of the year may lead to a surge in completion and production activity. The Permian bottleneck has caused Midland wellhead prices to retain a discount to WTI at Cushing since February 2018. S&P Global Platts assessed WTI in Midland at a $5.85/b discount Tuesday, a differential that has widened from $5.25/b at the start of the year, but has narrowed since late August, when it hit $17.75/b.
In every facet of the aluminum industry to discuss lessons learned in the past 12 months and what you should expect in the coming year, including a global outlook, sanctions impacts, end-user trends, demand drivers and much more. Sommers said API was working closely with the Trump administration, including US Trade Representative Robert Lighthizer and the Department of Commerce, on the trade and tariff issues and would engage the new Congress if “those conversations don’t prove fruitful.” “It’s not good for business, and we’re going to continue to talk to everyone,” Sommers told reporters on a press call before API’s State of American Energy event in Washington.
Sommers said the steel tariff was preventing at least one Permian pipeline from being completed, without naming the developer. Plains All American estimated the tariff increased the cost to build the 585,000 b/d Cactus II crude pipeline by $40 million. The Permian-to-Corpus Christi line is expected to start up late this year.