1. The Permian pipeline glut
– The Permian basin is producing a little over 4.1 mb/d, but has 3 mb/d of excess pipeline capacity.
– “We are going to need significant consolidation in the midstream space overall, and particularly in these basins where the oversupply is as dramatic as it is,” Tyler Rosenlicht, a portfolio manager at investment firm Cohen & Steers Inc., told the WSJ.
– Permian pipelines and local refineries can take 7.3 mb/d. But capacity will jump to 8.3 mb/d in 2021. By that time, only half of the available pipeline capacity will be used, down from a utilization rate of 96 percent in 2018.
– Ultimately, falling Permian production and rising pipeline capacity is making the gap larger.
– Enterprise Products Partners (NYSE: EPD) canceled its 450,000-bpd Permian pipeline this month. “In the medium-term, we don’t need it, and they don’t need it,” the company’s chief executive said.
2. Falling costs for batteries
– For a long time, the $100 per kWh price point for battery packs has been held up as a key threshold needed to make electric vehicles equal on price with the internal combustion engine.
– That goal is now very close to becoming a reality. In March, LG Chem said it might hit that point soon.
– As of 2019, the average lithium-ion battery pack costs $156/kWh. BloombergNEF sees that falling to $131/kWh this year. The $100/kWh threshold could be…