Plains Expects 3-4 Million Barrels in Curtailments for North America; One Million in Permian

In its Q1 2020 report, Plains All American said that it estimates that oil output will drop by 3-4 million barrels in North America this year due to the curtailment activity that has increased amidst the oil price drop.

In the Permian specifically, PAA estimates that overall exit rate production will be down 15-20% YOY for 2020 and that a noticable recovery won't occur until 2021.

May / June 2020 Output to Drop by 3-4 Million Barrels

PAA estimates that total oil output in May and June 2020 will decline by 3-4 million barrels - May and June are the two months seeing the most curtailment activity by operators.

PAA said: "In North American markets, the widespread shelter-in-place requirements for most metropolitan areas resulted in an immediate response by the U.S. refining sector to quickly reduce runs. Demand destruction is impacting the entire value chain, the supply chain causing crude oil and gasoline inventories to approach their peaks, driving wellhead prices to historic lows, and reducing producer drilling and completion activity, causing significant levels of voluntary shut ins, which we expect will cause production levels to decline in the very near future in most if not all key basins.

Permian to See One Million Barrel Decline (~30% of Total)

PAA estimates that ~30% of the total decline will be seen in the Permian, at one million barrels.

Plains said: ""We now expect 2020 shale production to decline in all basin both in terms of the year to year average and exit rate including the Permian, and now forecast 2020 transportation segment volumes of 6.6 million barrels per day.

"It remains too early to call Permian growth trajectory for 2021, but we expected to be lower and what we internally forecast at the beginning of the year pre-coronavirus. As the result of these dynamics and as previously announced, and as reflected on slide six, we have reduced our 2020, 2021 capital program by $750 million or approximately $1.35 billion or 50% from factoring in previously anticipated JV project financing to a total of approximately $1.55 billion over the two year period."

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