When assessing U.S. oil production declines and what it means for midstream companies many times we are asked, “What happens to crude oil pipeline volumes if production declines as the EIA expects, by approximately 800,000 barrel per day (bpd) compared to 2015?” That’s a very good question. To clarify, the 800,000 bpd decline in U.S. production is based on average 2016 volumes versus average 2015 volumes. However, the exit rate of production, i.e. what you end 2016 at versus what we ended at in 2015, will be closer to a 900,000 bpd decline. To appropriately assess the impact of oil production declines, it’s important to point out some key factors: • Mode of transportation can vary between pipeline, rail car, barge and truck • Cost of transportation varies by mode • Destination matters as it creates basis, i.e. differentials between various locations • Strategic value of the asset matters […]