One Step Ahead - Permian Natural Gas Growth Spurs More Processing Capacity

In the past four years, natural gas production in the Permian Basin has doubled — from 6.6 Bcf/d in August 2017 to 13.4 Bcf/d now. To keep pace, the midstream sector has spent many billions of dollars on new gas gathering systems, processing plants, and takeaway pipelines, with virtually all of that investment backed by long-term commitments from producers and other market players. Thanks to that build-out, the Permian now has sufficient takeaway capacity — at least for another couple of years. But despite the 50-plus processing plants that have come online in the play’s Delaware and Midland basins in recent years, still more processing capacity is needed, as evidenced by the expansion projects and new plants that we discuss in today’s blog.

The Permian has proven itself to be a remarkably resilient producer of hydrocarbons — something we track in our weekly Crude Oil Permian and NATGAS Permian reports. No doubt, there have been challenges and setbacks along the way, chief among them a devastating pandemic that, in addition to its human toll, slashed demand for crude oil, the commodity that drives drilling and production activity in the Permian. In response, crude oil production there sagged in the spring of 2020 and gas production (see Figure 1) fell by 1.3 Bcf/d to 10.6 Bcf/d from April to May. Then, in February 2021, the Deep Freeze caused Permian gas production to fall 2.2 Bcf/d from the previous month to 10.1 Bcf/d.

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