Negative Permian gas prices linger into August

: Natural gas
24/08/08

Negative spot natural gas prices in the Permian basin of west Texas and southeast New Mexico persisted into the first week of August from July as supplies continued to outstrip demand.

Sellers have needed to pay buyers to take gas from the Waha hub in west Texas since 26 July, with the Waha index falling below -$1/mmBtu three times in the last two weeks. The index has held steep discounts to the US benchmark, the Henry Hub, since 17 January.

The Waha index hit a low of -$4.835/mmBtu in May, having last fallen below -$4/mmBtu during two sessions in December 2022. The index hit its lowest point at -$5.225/mmBtu in April 2019. Waha prices have traded negative during 59 sessions thus far in 2024, versus six trading session in 2023 according to Argus data.

Permian prices have faced pressure from several factors, chief among them being increased production. The Permian basin produces large volumes of associated gas, a byproduct of crude-directed drilling. Crude production in the Permian reached 6.2mn b/d in June, while gas production in the region averaged 25.3 Bcf/d (717mn m³/d), according to the US Energy Information Administration (EIA). Permian gas production was up by 10pc from June 2023 and was 75pc higher than the June 2019 average, according to EIA estimates.

Gas takeaway capacity out of the Permian has risen since 2019 with the addition of the Gulf Coast Express, Permian Highway and Whistler pipelines. Even with new pipeline additions, takeaway capacity has continued to be outsripped by production, pushing down prices. Despite the demand for increased takeaway capacity, new pipeline projects have tended to only be announced following confirmed support from producers in the form of long-term contracts. In the meantime, midstream companies have attempted to match demand by way of capacity expansions to existing lines.

The 2.5 Bcf/d Matterhorn Express pipeline should help relieve constraints when it comes online later this year, with the Blackcomb and Warrior pipelines set to follow in 2026. The startup of the Matterhorn Express will likely narrow the spread between the Waha hub and the Henry Hub, though the effect will be short-lived if production continues to climb.

By David Haydon

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25/12/19

Trinidad not part of US blockade of Venezuela: PM

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W Australia's gas surplus outlook strengthens: Aemo

25/12/19

W Australia's gas surplus outlook strengthens: Aemo

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Energy Transfer halts plans for Lake Charles LNG

25/12/18

Energy Transfer halts plans for Lake Charles LNG

Houston, 18 December (Argus) — US midstream firm Energy Transfer is suspending development of its planned 16.5mn t/yr (2.2 Bcf/d) Lake Charles LNG export terminal in Louisiana to focus on natural gas pipeline expansions, the company said today. The pivot allows the company to reallocate capital to gas pipeline projects that provide "superior risk/return profiles", Energy Transfer said. The company separately said it will increase the capacity of its planned Desert Southwest expansion of the Transwestern pipeline, allowing it to move more gas from west Texas' Permian basin to the southwestern US. The decision to scrap Lake Charles LNG follows a month of dissonance from company executives about moving forward with the facility. Energy Transfer co-chief executive Mackie McCrea told investors in early November that the company would not be able to reach a final investment decision (FID) until it sold off 80pc of equity shares in the project. But Amy Chen Davis, vice president of Lake Charles LNG, told an industry event on 10 December that the company was in talks with potential partners and would reach a final decision in early 2026. The company said earlier this year it planned an FID by the end of 2025. The midstream firm has sought for years to convert the existing Lake Charles import facility into an export terminal. Shell signed on with a 50pc stake in 2019 but pulled out the following year as part of cost-cutting measures during the Covid-19 pandemic. McCrea had signaled to investors that the company was being cautious with entering the LNG export industry. "When you're chasing billions of dollars in projects, several of which we've already announced, we've got to be careful stepping out on something like this," McCrea said on 5 November. "We're not an LNG company like we compete with. We're a pipeline company that has a regas facility converting part of it to LNG." Investor MidOcean Energy had signed a preliminary agreement to fund 30pc of Lake Charles LNG's construction costs in exchange for 30pc of offtake, but the firms never finalized the deal. Suspension of the project also may set back the efforts of Saudi Aramco, which holds a 49pc stake in MidOcean, to develop an LNG portfolio. MidOcean has a share in Peru's 4.45mn t/yr Pampa Melchorita LNG export plant and the Shell-led 14mn t/yr LNG Canada export terminal in British Columbia. Pipeline project in focus Meanwhile, Energy Transfer said it will upsize capacity on the Desert Southwest expansion. The company said it will increase the expansion's capacity by 800mn cf/d to 2.3 Bcf/d to satisfy additional demand in the southwestern US. Energy Transfer reached an FID on Desert Southwest in August. The expansion is one of several projects working to increase gas transportation capacity out of the Permian, where a steady increase in crude-driven activity — and commensurate rise in associated gas output — has outpaced the increase in gas takeaway capacity. This has created a local gas supply glut and some of the lowest gas prices in the US. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

US House passes bill to expedite permitting

25/12/18

US House passes bill to expedite permitting

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Ithaca first to try new UK North Sea regime

25/12/18

Ithaca first to try new UK North Sea regime

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