Bragging rights are a big deal in Texas, and we’re not just talking pride about the Astros’ annual rampage through baseball’s post-season. Getting to the top is also a source of immense pride for oil and gas midstreamers, and right now Targa Resources claims the bragging rights as the largest gatherer and processor of associated natural gas in the Permian Basin. Targa’s bold decision to build an integrated gas and NGL business, its timely infrastructure expansions through and after the pandemic, and a recent, accretive acquisition have resulted in a massive footprint where a stunning 25% of forecast Permian gas production growth is expected to take place. But strong competitors such as Enterprise Product Partners, DCP Midstream and Energy Transfer are nipping at Targa’s heels. In today’s RBN blog, we discuss highlights from our new Spotlight Report on the company.
The dominant post-pandemic theme for the midstream sector has been the scramble to develop the gathering systems, processing plants, and other infrastructure needed to support continued growth in Permian production. As we reviewed in our recent blog series, Keep it Comin’ Love, crude oil production there has climbed by more than 700 Mb/d since 2020 to a new record, driving gas volumes to about 22 Bcf/d — up from 19.5 Bcf/d a year ago, 16.9 Bcf/d in 2020, and an average of just 11.5 Bcf/d four years ago. RBN’s Mid-Case scenario projects gross gas volumes in West Texas and southeastern New Mexico will grow by another 6 Bcf/d, or 27%, to over 28 Bcf/d by the end of 2025. Gas processing capacity in the Permian is expected to reach 24.5 Bcf/d by the end of this year, with more than half of that added since 2018.
Targa Resources tops the ranking of Permian gas processors with 5.4 Bcf/d of capacity, a 68% increase since the beginning of 2020. Most importantly, that growth has expanded the company’s footprint in what have become the core production areas of the Permian’s Midland and Delaware basins, and the quality of Targa’s portfolio has given it a growing share of rapidly rebounding output. Despite widespread COVID-induced well shut-ins and a 2% reduction in Permian associated gas production in 2020, Targa reported a 9% increase in Permian volumes that year. The company’s volumes rose by another 12% in 2021 and are forecast to rise another 10%-15% in 2022. This surging output has triggered not only record gathering and processing earnings but also waterfall profits as those volumes cascade down its NGL transportation, fractionation and export system. But the best may be yet to come: Our partners at East Daley Analytics estimate that Targa’s current, massive footprint encompasses 25% of near-term Permian natural gas production growth.
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About the song
“Sitting on Top of the World” was written by Walter Vinson and Lonnie Chatmon of The Mississippi Sheiks. The song was first released by the group on a 78 RPM single on the Okeh Records label in 1930. The song later appeared as the first song on side two of the Arhoolie Records compilation album of Mississippi Sheiks songs, Stop and Listen, released in 1974. “Sitting on Top of the World” was inducted into the Grammy Hall of Fame in 2008 and was selected for preservation by the National Recording Registry of Congress in 2018. Many artists have covered the song over the years, including Cream, Frank Sinatra, Bob Wills, Milton Brown, Howlin’ Wolf, Bob Dylan, The Grateful Dead, and Jack White. Personnel on the record were: Lonnie Chatmon (vocals, fiddle) and Walter Vinson (vocals, guitar).
The Mississippi Sheiks was formed in Bolton, MS, in 1930 by Carter, Lonnie and Sam Chatmon, along with Walter Vinson. They toured throughout the South and also did shows in Chicago and New York City. The group was active for five years, during which they recorded over 70 songs for Okeh Records, Paramount Records and Bluebird Records. In 2013, Jack White’s Third Man Records teamed up with Document Records to release The Complete Recorded Works in Chronological Order of Charley Patton, Blind Willie McTell and The Mississippi Sheiks. The group disbanded in 1935, after which Lonnie Chatmon opened a cafe in Glen Allan, MS, before passing away in December 1939. During the 1960s’ folk and blues revival, Sam Chatmon and Walter Vinson reunited to perform and make recordings as The New Mississippi Sheiks. Walter Vinson died in April 1975 and Sam Chatmon died in February 1993.
