Sept. 14 (UPI) -- New pipeline infrastructure can't get built fast enough in the Permian Basin, where oil is selling at a $15 discount and producers are locking in prices for the next two years.
New multi-billion pipeline projects are under construction or planned over the next few years to get the crude oil and natural gas to refineries on the Gulf Coast. But a new report by Wood Mackenzie shows producers don't have faith that the pipelines will be done on time.
The number of Permian producers hedging their bets for 2020 increased by more than five times in the second quarter. Companies doing the most hedging include Concho Resources, Energen Corp. and Noble Energy.
"The only reasonable conclusion one can draw from this surge is that Permian producers are concerned that key pipeline projects won't be completed on schedule," said Andrew McConn, a corporate research analyst at Wood Mackenzie.
Historically, oil companies have stayed away from futures contracts in hopes that prices will go up. That could still happen if the pipelines are completed on time.
WTI, the U.S. benchmark for crude oil, was trading at $69 Friday morning. But oil produced in the Permian Basin in West Texas could be selling as low as $54 a barrel.
UK union suspends Total strike
The labor strike that periodically shut down several Total offshore oil and gas platforms stopped Friday so Unite union members could review the latest proposal from management.
"Unite will now postpone Monday's (September 17) scheduled industrial action to allow our members to take part in a consultative ballot," according to a statement from the company.
More strikes are scheduled for Oct. 1, 15 and 29.
The main issue in the labor dispute is Total's demand for North Sea oil workers to take 3-week shifts.
Driller returns oil field back to Mexico
Mexico had another setback in its attempt to open oil and gas production to private industry. A small Mexican-based driller called Consorcio Petrolero 5M del Golfo returned a portion of the onshore area it had won in a 2015 auction. The company cited low production.
This is the latest private company to return all or part of the drilling rights that Mexico had auctioned off as the state-run Petroleos Mexicanos opened itself up to foreign investing.
Kickback scheme linked to Venezuelan's PDVSA
Two former Venezuelan officials were among the 28 people charged with corruption in an alleged kickback scheme linked to Venezuela's state run oil company, PDVSA.
The group is accused of receiving up to $2.3 billion in kickbacks in exchange for lucrative PDVSA contracts.