The combination of rising production of “associated” natural gas in the Permian Basin and rising exports of pipeline gas to Mexico—and soon, LNG on ships out of planned South Texas export terminals—is driving the need for new gas pipelines from the Permian to the Corpus Christi area, including the all-important Agua Dulce gas hub in Nueces County, TX. Yesterday (Monday, April 3), NAmerico Partners unveiled plans for Pecos Trail, a proposed 468-mile, 1.85-billion-cubic-feet-a-day pipeline aimed squarely at linking emerging gas supply with emerging gas demand. Pecos Trail joins two other projects announced within the past few weeks that target the same opportunity. Today we look at the gas side of the need for new takeaway pipelines out of the U.S.’s hottest shale play, and NAmerico’s newly announced plan to address it.
Two of the hottest energy stories of the past several months (and maybe for the next few years as well!) are 1) the crude oil production boom in the Permian Basin in West Texas and southeastern New Mexico, and 2) the boom in U.S. exports of natural gas—pipeline exports to Mexico and LNG exports by ship. In fact, there is a real connection between these two headline-grabbers; that is, growing crude production in the Permian will lead to the production of vast quantities of associated gas, and the proximity of the Permian to export markets (Mexico and planned LNG terminals along Texas’s Gulf Coast) make the Permian a logical supplier of a substantial portion of the billions of cubic feet a day of gas that will be needed to keep pace with export demand.
The Permian has been a frequent topic in the RBN blogosphere. Last week, in Back in the Saddle Again (our preview of RBN’s upcoming School of Energy in Houston on April 25-26), we discussed the likely need for additional crude pipeline takeaway capacity out of the Permian (beyond the four projects already scheduled to come online later this year and in 2018). Before that, in our Still the One blog series, we discussed rising production of associated gas (and natural gas liquids, or NGLs) in the Permian and all the gas processing capacity being developed in the play.