There is a premium natural gas market developing in South Texas, where exports to Mexico could rise by more than 2.0 Bcf/d over the next four years and gas liquefaction and LNG export facilities are expected to add another 1.8 Bcf/d of demand to the market in that time. While gas production from the nearby Eagle Ford Shale is showing signs of at least a partial comeback and will help meet some of this new demand, the South Texas market may be heading toward being short supply in the next few years, resulting in higher prices there relative to surrounding markets. That would make the South Texas market an attractive destination for supply as far north as the Marcellus and Utica shales. In fact, there is a slew of proposed southbound pipeline projects extending deep into Texas along the Texas Gulf Coast for shippers to get their gas there. But how much incremental supply will be needed to balance the market? Today we begin a series analyzing the gas supply and demand balance in South Texas, starting with prospects for production growth out of the Eagle Ford Shale.
One of the biggest enablers of U.S. natural gas production growth over the next several years will be the emerging export demand along the Texas Gulf Coast and across the border in Mexico—a subject we’ve written about extensively in our “I Saw Miles and Miles of Texas” Drill Down series. The low gas-price environment has spurred massive investment in new petrochemical plants, LNG export facilities and cross-border pipeline systems to serve growing electric generation demand in Mexico. A good portion of this emerging export demand in the next few years will be sourcing its gas from South Texas via a little-known trading hub in Nueces County, TX called Agua Dulce (30 miles west of Corpus Christi, TX).
Canadian crude output is rising, requiring new export routes. As traditional pathways face constraints, the U.S. Rockies—especially the Guernsey, WY hub—are emerging as key corridors for moving Canadian heavy crude to downstream markets, including the Gulf Coast.
It is quite clear that this demand is on its way. What’s less clear is how the demand will be met. The new demand is within striking distance of Texas’s Eagle Ford Shale, but that production has been in decline over the past couple of years. Meanwhile producers in other supply regions, including the Marcellus/Utica in the Northeast and SCOOP/STACK in Oklahoma (see our latest Drill Down Report on SCOOP/STACK), are equally eager to capture market share of these growing sectors in Texas. But actually getting the gas there is a challenge (see “I Saw Miles and Miles of Texas” Part 4) and will hinge on the availability of pipeline capacity to get their gas all the way down to South Texas. These factors have the potential to create some price volatility depending on how well supply is able to keep up with growing demand.
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About the song
“Coming Around Again” was written by Carly Simon and first appeared in the end credits of the 1986 motion picture Heartburn. It later appeared as the first song on side one of Carly Simon’s 13th studio album, Coming Around Again. Released as a single in October 1986, it went to #5 on the Billboard Adult Contemporary chart and #18 on the Billboard Hot 100 Singles chart. The success of the single started a career resurgence for Simon, who was known for her hit singles in the 1970s. The song is included in multiple compilations of her work. Personnel on the record were: Carly Simon (lead, backing vocals, keyboards), Scott Martin (keyboards, backing vocals), Bill Payne (keyboards), Russ Kunkel (drums), and Paul Samwell-Smith and Terri Homberg (backing vocals).
The album, Coming Around Again, was recorded in 1986-87 at Right Track Recording, The Power Station, PinWheel Studio, Unique Recording Studios and Flying Monkey in New York City and Cliffhanger Studio in Vancouver. Produced by Clive Davis, Bryan Adams, John Boylan, Frank Filipetti, Russ Kunkel, George Massenburg, Rob Mounsey, Bill Payne, Richard Perry and Paul Samwell-Smith, the LP was released in April 1987. It went to #25 on the Billboard 200 Albums chart and has been certified Platinum by the Recording Industry Association of America. A cast of 42 (including Simon) musicians and 10 producers contributed to the album. Four singles were released from the LP.
Carly Simon is an American singer, songwriter, musician and author. Her father was Richard Simon, who co-founded the publishing house Simon & Schuster. In the 1970s Carly Simon had 13 Top 40 hits. Her professional career started in 1963 when she began performing with her sister Lucy as The Simon Sisters. Their 1964 Kapp Records debut album, Meet the Simon Sisters, reached #73 on the Billboard 200 Albums chart. Her first solo album was the highly successful 1971 release, Carly Simon. That album won her a Grammy Award for Best New Artist. She has released 23 studio albums, two live albums, 10 compilation albums, one soundtrack album and 41 singles. She has authored two memoirs and five children‘s books and has won an Academy Award, a Golden Globe Award and two Grammy Awards. Simon is a member of the Rock and Roll Hall of Fame, Songwriters Hall of Fame, and has a star on the Hollywood Walk of Fame. She continues to record and do occasional public appearances. Her last concert appearance was in 2018 at Carnegie Hall.
