As previously discussed, outright prices for Waha natural gas have been in negative territory for most of the past two months. During the period since mid-March, there have been only eight days where producers did not have to pay to have marginal Permian gas taken off their hands, according to pricing data from Natural Gas Intelligence (NGI). Four of those eight days were the period from the most recent Friday through Monday (May 3 through 6). Outright cash prices were negative early last week but flipped above zero on May 3 as Gulf Coast Express returned to full service. Although positive, and higher than they have been, Waha cash prices are still below $0.50/MMBtu. Prices will likely fall back below zero mid-week when Permian Highway begins its outage. Henry Hub cash prices averaged $1.66/MMBtu during the period from April 28 to May 5, up $0.17/MMBtu week-on-week.
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Negative natural gas prices have been breaking hearts in the Permian Basin for many years, with pipeline development struggling to keep pace with rapid increases in associated gas production, but 2024 has shattered all previous records for the severity and length of negatively priced periods. The Matterhorn Express Pipeline, which started partial service at the beginning of October, is helping to stabilize the market for now, but with more production gains on the way, additional takeaway capacity will be needed. And after this year’s run of negative prices, producers have been willing to commit to new capacity.
