Keep This Party Going - The Expansion of Permian Gas Infrastructure Is Far From Over

The build-out of natural gas processing plants in the Permian continues unabated. In just the past few days, four of the largest midstream players in the U.S.’s premier hydrocarbon production area have unveiled plans for a combined 1.3 Bcf/d of new processing capacity, most of it in the gassier Delaware Basin portion of the crude-oil-focused play. And that’s on top of the 11.7 Bcf/d of processing that’s already been added in the Permian over the past four-and-a-half years — and the 2.6 Bcf/d of soon-to-be-finished projects announced previously. That’s quite a run, and still more processing plants may be in the cards — if midstreamers build more takeaway-pipeline capacity. In today’s RBN blog, we discuss recent processing-plant and pipeline developments in West Texas and southeastern New Mexico.

Production of dry natural gas in the Permian is now averaging 15.5 Bcf/d — an amazing thing, really, when you consider that (1) at the start of 2018, the region was producing less than 7 Bcf/d, and (2) the focus of production in the Permian is crude oil, whereas associated gas (natgas and NGLs) has until recently been a byproduct of sorts that producers and their midstream cohorts need to deal with as they continue to expand their activities. Handling all that raw gas has required the development of scores (yes, scores!) of gas processing plants and a number of new or expanded natural gas and NGL pipelines. And oil-focused producers have been willing to pony up for processing because the last thing they want is for their oil production to be stymied because their gas didn’t flow. The infrastructure build-out continued without letup during the COVID era, as we chronicled in our ... Ready for It? blog series, One Step Ahead and, most recently, More, More, More. (And don’t forget, we track everything related to Permian gas markets in RBN’s weekly NATGAS Permian report.)

In a related vein, we’ve also been monitoring the ongoing consolidation and rationalization of gas gathering and processing assets in the Permian, and written blogs about the merger of Altus Midstream and BCP Raptor Holdco LP (the corporate parent of EagleClaw Midstream) into a new entity called Kinetik Holdings; Enterprise Products Partners’ purchase of Navitas Midstream, a leading gas gatherer/processor in the Midland Basin; and (just last month) Targa Resources’ acquisition of Lucid Energy Group from Riverstone Holdings and Goldman Sachs Asset Management for $3.55 billion in cash.

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