So far in October we are recording the lowest average monthly dry gas production figures in the Permian since July. The ramp-up of flows on Matterhorn Express was expected to occasion a jump in regional production, but events on other pipelines have ensured a far different outcome. Production dropped sharply at the beginning of last week, driven primarily by lower receipts on El Paso and Northern Natural because of pipeline maintenance. Ongoing work on El Paso continues to restrict Permian production and outflows intermittently. Overall, production receipts dropped as low as 18.8 Bcf/d on October 17, which is nearly 1 Bcf/d lower than where receipts were the week prior (see production figures in chart below, where 2024 production almost fell below the 2023 line for the first time this year). On El Paso, specifically, production receipts last week averaged 0.46 Bcf/d lower than the week prior. There is also likely pipeline maintenance ongoing on some of the Eastbound legacy intrastate pipelines, though intrastate pipelines are not required to report outages.
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Already Gone - Is the Permian Basin Already Out of Natural Gas Takeaway Capacity?
After a record run of negative pricing last spring and summer, the Permian Basin collectively cheered as WhiteWater’s Matterhorn Express pipeline began flowing last October, bringing much-needed takeaway capacity to the area. Cash prices at the Waha Hub rebounded and the basin had a relatively uneventful winter, but prices began dropping in early March and have once again traded below zero for most of the past few weeks. This has taken the market somewhat by surprise, as many expected the impact of Matterhorn’s startup to last more than a few months. Prices jumped back above zero on Wednesday and above $1/MMBtu on Thursday, but with major pipeline maintenance coming next week, any relief is likely to be short lived. In today’s RBN blog, we’ll look at what’s driving the recent run of negative pricing in the Permian Basin and what it means until additional infrastructure comes online next year.
