Natural Gas

It’s well understood that methane is a significant greenhouse gas and that reducing methane emissions from oil and gas production is critical to hitting long-term emissions targets, but that’s about where most of the common ground ends. There are serious disagreements about the actual magnitude of methane emissions, the proper role of government regulation, and whether requirements to control those emissions would place an undue burden on the energy industry and lead to decreased supply. In today’s RBN blog, we look at how emissions estimates are made, why they can vary significantly, and how the disagreements about how to curb those emissions might be resolved.

Before the bullish winter of 2021-22, it appeared the Northeast natural gas market was headed for familiar territory: worsening seasonal takeaway constraints and deeper, constraint-driven price discounts starting as early as this spring. Instead, the market went in the other direction the past few months. Takeaway utilization out of Appalachia has been lower year-on-year and, for the most part, Appalachian supply basin prices have followed Henry Hub higher even as that benchmark rocketed to 14-year highs. That’s not to say that constraints out of the Northeast aren’t on the horizon. But the market is now poised to escape the worst of it this year, despite the completion of the last major takeaway pipeline project in the region, Mountain Valley Pipeline (MVP), being pushed out another year or longer, if it crosses the finish line at all. In today’s RBN blog, we provide an update on regional fundamentals and what recent trends mean for gas production growth and pricing in the region.

An explosion June 8 at Freeport LNG, the 15.3 MMtpa (2 Bcf/d) export terminal on Quintana Island, TX, has knocked it offline at a time when the global market is already facing tight conditions because of the war in Ukraine and other factors. The explosion, fire and subsequent shutdown — which fortunately did not include any injuries — sent U.S. natural gas tumbling off recent highs and shot global gas prices higher. Much is still unknown about the developing situation, including exactly how long the outage will last. While Freeport has said it expects the terminal to be offline for at least three weeks, multiple regulatory agencies have investigations underway and will likely need to approve a return to service. In today’s RBN blog, we look at the latest news from Freeport LNG and run through the potential market implications, starting with impacts to the U.S. gas market.

Just like there’s room for Amazon and Etsy in the e-commerce world — one for mass marketers and the other for artisans — there’s room in the energy industry for both large- and small-scale LNG companies and plants. By focusing on the development of niche markets and scaling their production and distribution operations accordingly, a number of smaller (but growing) players in the LNG space have been making natural gas available to a surprising variety of customers: from industrial, oil-and-gas and mining companies to rocket launchers, Caribbean resorts and island utilities. ESG is a big driver — the LNG supplied often replaces diesel, fuel oil and propane, which can have bigger carbon impacts. In today’s RBN blog, we continue our series on small-scale LNG with a look at a cross-section of key players in this space and how they’ve been growing their businesses.

The race is heating up for building natural gas pipeline takeaway capacity out of the Permian. Associated gas production from the crude-focused basin is at record highs this month and gaining momentum, which means that without additional pipeline capacity, the Permian is headed for serious pipeline constraints — and potentially negative pricing — by late this year or early next, which would, in turn, limit crude oil production growth there. Midstreamers are jockeying for the pole position to move surplus gas from the increasingly constrained basin to LNG export markets along the Gulf Coast. One of the contenders, Matterhorn Express Pipeline (MXP), a joint venture (JV) between WhiteWater, EnLink Midstream Partners, Devon Energy and MPLX, announced its final investment decision (FID) late yesterday. In today’s RBN blog, we provide new details on the greenfield project.

Production bottlenecks and global energy security concerns stemming from the Ukraine war have flipped the script on various aspects of the U.S. energy markets. One of them is the softening of Wall Street and regulatory resistance to investment in new hydrocarbon infrastructure. That’s been particularly good news for the swarm of LNG export projects looking to move forward. It’s also improved somewhat the prospects for the embattled Mountain Valley Pipeline (MVP), the last major greenfield project for moving natural gas out of the Northeast from the Appalachian Basin. A court vacated three of the project’s key federal authorizations earlier this year, but the project recently got a greenlight when the Federal Regulatory Energy Commission (FERC) approved MVP’s amendment certificate application. Equitrans Midstream said last week that it would pursue new permits and target in-service in the second half of 2023. But the prospect of more legal challenges looms, and the question is, will it get across the finish line before severe constraints arise? In today’s RBN blog, we provide an update on the Appalachian gas market.

The first Saturday in May is only a couple of days away, so brush off your seersucker jacket or find that Kentucky Derby hat, as it’s the only time of year most Americans watch an actual horse race. That’s kind of how it goes with the Permian natural gas market as well, with only intermittent interest from general gas market participants, usually when there’s a pipeline capacity issue leading to a noticeable impact on prices. Now is one of those times. Permian gas production is racing higher and the pipelines to get gas to market are quickly getting jammed up. Daily prices in the Permian are trading about 10% lower than those in Louisiana and the forward basis markets suggest they will deteriorate further in the months ahead. Naturally, midstream companies are quickly trotting out new pipeline projects, but sorting out the contenders is much like picking the winner on Saturday. You need data and at least a little luck, and we’re here to help out with the former. In today’s RBN blog, we lay out what we know and how we view the Permian gas pipeline derby.