Pipeline constraints

Midstream operators have planned and continue to announce plans for more oil and natural gas pipeline projects in the area to ship oil and gas from the Permian to the Gulf Coast. But many of those pipelines will not come on stream before late in 2019 and 2020.Analysts believe that the WTI Midland discount and the Waha natural gas discount to Henry Hub prices will become worse before they become better, at some point in 2020. The Midland discount has been above $10 a barrel to Houston WTI and Cushing WTI for a couple of months and is expected to further widen in the coming months, at least until some of the planned new oil pipelines out of the Permian become operational.

 That is a large discount to pay for pipeline service.