Permian Basin natural gas production is growing at a torrid pace. After starting 2017 just below 6 Bcf/d, production is set to breach the 8-Bcf/d mark soon on its way to 10 Bcf/d by the end of 2019. Pipelines flowing out of the basin are coming under increasing strain, and just about every single gas pipeline leaving the Waha hub in West Texas is now being utilized at levels not witnessed in years — if ever. Even routes north from the Permian to the Midcontinent and Midwest markets, traditionally only attractive on the coldest winter days, are starting to look viable year-round. Today, we look at recent gas-price and flow trends in the Permian natural gas market.
NATGAS Permian is a weekly natural gas fundamentals analysis focusing entirely on the key market drivers within the Permian basin. The report contains details and forecasts around natural gas production, demand, pricing, and a summary of pipeline outflows and capacities from the Permian to neighboring regions.
Permian Basin natural gas has been the subject of many RBN blogs over the last 18 months. Back in January, we looked at gas pipeline takeaway capacity and planned expansions in Help on the Way. Last fall, we analyzed Permian natural gas flow patterns and prices in Witchy Waha. And last summer, we wrote a four-part series, It Was Good Living With You, (W)aha, in which we outlined our viewpoint that Permian gas production is set to grow to levels certain to create gas takeaway constraints in the basin. That view still holds, and over the course of these blogs, two factors have remained constant: (1) natural gas production in the Permian has grown faster than expected, and (2) regional gas basis prices continue to deteriorate. With production curtailments now likely a fait accompli before pipeline expansions bring new takeaway capacity to the basin, the Permian gas market is progressing deep into its lineup of pipeline takeaway options. This blog will look at the most recent development in the Permian gas takeaway end-game: surging volumes headed north on the pipelines that lead to the Midcontinent and Midwest end-use markets.
We should note first that Permian natural gas production has been racing higher since our last look at the subject. The most recent data from RBN’s NATGAS Permian report shows that Permian dry gas continues to set records, and recently touched 7.85 Bcf/d (dark blue line in Figure 1). The trajectory of that growth is of most concern, with volumes up about 700 MMcf/d since December 2017. While NATGAS Permian’s current forecast shows Permian gas production reaching 10 Bcf/d by the end of 2019, we see potential curtailments of Permian gas production as soon as the third quarter of this year and sooner if production maintains its current flightpath. At present, the only factor likely to derail the growth of Permian basin natural gas would be takeaway constraints developing in the crude oil market that force producers to delay well completions.
Join Backstage Pass to Read Full Article
About the song
"Omaha" is one of the better-known songs by Moby Grape, a psychedelic rock and roll band that was formed in San Francisco in 1966. “Omaha” was one of five singles Moby Grape released simultaneously off its self-titled 1967 debut album, and was the only one to chart, reaching #88. The radio-friendly tune, which ranks 95th on Rolling Stone magazine’s “100 Greatest Guitar Songs of All Time,” was written by band member Skip Spence. The hook-laden rocker was later covered by The Golden Palominos on their 1985 album, Visions of Excess, with R.E.M.’s Michael Stipe on lead vocals. Bruce Springsteen occasionally covers "Omaha" in his live concerts.
Moby Grape featured a unique three-guitar attack and was one of the few — if not the only — rock band that featured five lead vocalists and songwriters. In addition to Skip Spence (guitar and vocals), the group included Jerry Miller (guitar and vocals), Peter Lewis (guitar and vocals), Bob Mosley (bass and vocals) and Don Stevenson (drums and vocals). They managed to collectively merge what would later be known as Americana music into a potent psychedelic rock and roll stew. However, Moby Grape’s commercial success was impeded by bad management. Also, the decision to release five singles off their debut album at the same time led to a perception that the band was over-hyped. Music writer Jeff Tamarkin said of the group, "The Grape's saga is one of squandered potential, misguided decisions, blunders and heartbreak, all set to the tune of some of the greatest rock and roll ever to emerge out of San Francisco."
Counting Crows, the American rock band, has a different song with the same “Omaha” name; the tune's refrain –– which helped inspire today's blog title — begins, "Omaha, somewhere in Middle America." The tune appears on Counting Crows' 1993 debut album, August and Everything After. The LP also included two of the group's biggest hits: "Mr. Jones" and "Round Here."
