April 19, 2018 – Natural Gas Intelligence
Natural Gas Futures Near Even as Another April Withdrawal Expected; Spot Prices Mixed
By Jeremiah Shelor
Analysts have been noting the pressure growing production out of the Permian Basin has been putting on takeaway capacity for crude and associated gas flowing out of the region.
Negative West Texas crude differentials to trading hubs in Cushing, OK, and the Gulf Coast have seen “at least a little relief in the past few days,” RBN Energy LLC analyst John Zanner wrote in a note to clients Tuesday. “For one, Phillips 66 has been restarting the Borger refinery (jointly owned by Phillips 66 and Cenovus Energy) in Hutchinson County, TX (50 miles northeast of Amarillo) after months of maintenance.”
Meanwhile, Enterprise Products Partners recently announced an increase in capacity on its Midland-to-Sealy pipeline from 330,000 b/d to 540,000 b/d, Zanner noted.
“The combined effect of the Borger restart and the 210,000 b/d Midland-to-Sealy expansion has been to improve the pricing of West Texas Intermediate at Midland by almost $2/bbl. Additional relief could come from Enterprise in May, when another 35,000 b/d is added” to Midland-to-Sealy’s total capacity, Zanner said.
“The problem is that a lot more pipeline capacity out of the Permian will be needed -- and fast. In our current Permian production forecast, we expect the play’s output to increase by an average of 500,000 b/d every year through 2020...Put simply, producers in the Permian’s Delaware and Midland basins desperately need big new chunks of pipeline takeaway capacity as soon as possible…
Read the full article here: http://www.naturalgasintel.com/articles/114082-natural-gas-futures-near-even-as-another-april-withdrawal-expected-spot-prices-mixed
