August 31, 2018 – Natural Gas Intelligence
Fall Arriving Early for Bears as Natural Gas Forwards Slide on Record Production
By Leticia Gonzales
Permian Constraints Reflected In Forwards
Aside from the benchmark Henry Hub, September losses across the continent were wide ranging, from as little as a nickel at Millennium East Pool to as much as 42 cents at Waha. The stout losses at Waha should come as no surprise as takeaway capacity in the region has largely hit its limits for both oil and natural gas in the Permian Basin.
“The Permian isn’t just a basin. It’s a phenomenon,” said RBN Energy CEO Rusty Braziel.
The end goal on the oil side is to get the Permian crude to the Gulf Coast and load it on ships for export to global markets. Midstream companies are working feverishly toward that goal. The same is true for all of the associated gas coming out of the basin, with pipeline companies looking to expand their facilities or build greenfield projects to send gas to the Gulf Coast, where demand continues to rise thanks to increasing exports to Mexico and overseas via LNG.
But with gas pipeline capacity still constrained, Waha cash prices have languished at about 90 cents below Henry Hub during August, sinking down to a spot price of $1.27 on Wednesday (Aug. 29), which was $1.69 below Henry Hub. That’s worse than the previous negative basis record of $1.42, which was set in April.
“Again, relief is on the way from midstreamers, but it is also a year away,” Braziel said.
Read the full article here: http://www.naturalgasintel.com/articles/115615-fall-arriving-early-for-bears-as-natural-gas-forwards-slide-on-record-production
