Energy Transfer Partners

Permian natural gas production recently topped 7 Bcf/d and shows no signs of slowing its growth trajectory. While new pipelines are expected to move additional Permian gas volumes to the Gulf Coast markets by the beginning of 2020, the current paths to those markets are full. Over time, Mexico is expected to export significant volumes directly from Waha, but current amounts are relatively small. As a result, increasing volumes of gas are leaving the Permian on the pipelines that head west to California and north to the Midcontinent. However, the pricing in these markets is downright ghoulish compared to the Gulf Coast and Permian gas is increasingly finding itself in scary market conditions. Today, we analyze recent pricing and flow trends in the Permian natural gas market.

The current phase of Mexico’s natural gas pipeline buildout, led by the country’s Comisión Federal de Electricidad (CFE), is nearing completion. With 22 new pipelines built or under construction, the effort has dramatically reshaped Mexico’s natural gas supply portfolio. The capacity of the pipeline network within Mexico has been tripled with the addition of 18 new pipelines, while four new pipelines on the U.S. side of the border will add almost 6 Bcf/d of export capacity by late 2018. As part of the building spree, CFE also initiated development of two new gas headers to be built in Texas: a 6-Bcf/d header at Waha in West Texas that was recently completed by a consortium of Carso Energy, MasTec, and Energy Transfer and the 5-Bcf/d Nueces Header, now under construction by Enbridge at Agua Dulce in South Texas. Today, we discuss CFE’s Nueces Header and its role in moving more gas south.

The Waha Hub in West Texas figures to play a prominent role in supplying natural gas to Mexico soon, as pipelines connecting the Permian Basin to the international border are now complete and supplying small volumes to Northwest Mexico. As additional pipelines and power plants come online south of the border over the next 12 months, a meaningful ramp-up in flows from Waha to Mexico is expected. Facilitating those flows will be a Waha-area header recently built by a consortium of Carso Energy, MasTec and Energy Transfer Partners for Mexico’s Comisión Federal de Electricidad (CFE). With 6 Bcf/d of capacity and multiple pipeline interconnects, the header stands to dramatically improve interconnectivity among gas pipelines at Waha, but it has largely stood in the shadows of Mexico’s pipeline buildout. Today we continue our series on the Waha Hub with a look at CFE’s Waha header and its expected role in handling Permian-sourced gas.

Booming Permian natural gas production has increasingly stressed pipeline takeaway in recent months as volume rose to more than 6 billion cubic feet per day (Bcf/d) — up almost 1 Bcf/d from the year-ago level. The production surge has broadened price spreads not only between Waha and other regional hubs, but also within the Permian between Waha and its sister hub, the El Paso Pipeline-Permian price pool. Creative midstream solutions are aimed at relieving these constraints, both in the form of long-haul takeaway and intrabasin pipelines. Of the latter form, few projects have moved with the speed and size of WhiteWater Midstream’s Agua Blanca. Today we continue our series on the Waha Hub with a look at intrabasin Permian midstream gas flows and how Agua Blanca is expected to keep them moving.

Permian natural gas production has climbed 1.75 Bcf/d, or nearly 40%, in the past three years to more than 6.3 Bcf/d in 2017 to date, and it’s poised to grow to nearly 12 Bcf/d over the next five years. Note that’s a “dry” or “residue” gas number; gross gas production is a couple of Bcf/d higher. As Permian production growth occurs, pipeline takeaway capacity from the primary trading hub in the area — the Waha Hub — will become increasingly constrained, a trend that will drive pricing and flow dynamics into the early 2020s. How full are the takeaway pipelines now and how quickly will constraints emerge? Today we continue our series on the Waha Hub with a look at current takeaway capacity and flows from the hub.

Rising volumes of associated natural gas production from accelerating oil-directed drilling in the Permian, along with growing demand downstream in Mexico and along the Texas Gulf Coast, are placing renewed importance on a key West Texas trading hub and pricing point — Waha. Permian gas production climbed almost 900 million cubic feet/day (MMcf/d) during 2016 to nearly 6.0 billion cubic feet (Bcf/d), and is up another 400 MMcf/d since then. Moreover, the pace of growth shows no signs of slowing. Much of this incremental supply will rely on the pipeline interconnects and takeaway capacity available at the Waha trading hub to get to desirable markets. The questions that arise, then, are, will the capacity at Waha be sufficient and at what point will more be needed? Today we begin a series diving into the infrastructure, gas flows and capacity at Waha.

Energy Transfer’s latest Texas-to-Mexico natural gas pipeline project—the 1.4-Bcf/d Trans-Pecos Pipeline—began service a little over a week ago (on March 31, 2017). It’s the third Tejas-to-Méjico gas transportation project to come online in the past six months, following the expansion of ONEOK’s Roadrunner Gas Transmission pipeline in October 2016 and the in-service of Energy Transfer’s Comanche Trail Pipeline in January 2017. The three projects have added a total of nearly 3.0 Bcf/d to pipeline export capacity since last October, all originating in the Permian Basin at the Waha gas trading hub in West Texas. A game-changer, right? Well, the reality is not so simple. These expansions on the U.S. side are largely reliant on takeaway capacity on the Mexico side of the border as well as the growth of power demand downstream to support flows, not all of which is coinciding with capacity additions on the U.S. side. Today we look at the latest export pipeline capacity additions and prospects for near-term export demand growth along the Texas-Mexico border.

Energy Transfer Partners (ETP) is the nation’s second-largest master limited partnership (MLP), with a market capitalization of $19.6 billion, $39.7 billion in 2015 revenue and $8 billion in 2015 capital investments. ETP’s general partner is Energy Transfer Equity (ETE), whose once-promising merger deal with Williams bit the dust in June. ETP’s extensive holdings include several major interstate and intrastate natural gas pipelines, midstream natural gas services, and natural gas liquids (NGL) pipelines and services; it also holds approximately 27.5% of the limited partner interests and all of the general partner interest in Sunoco Logistics Partners (SXL). With ETP’s size, its huge portfolio of midstream assets, and its high-profile general partner, the MLP was an obvious choice for our Spotlight Report series.  Today we summarize Part Two of our ETP Spotlight Report, which focuses on the company’s Midstream and Liquids segments.

Energy Transfer Partners (ETP is the nation’s second-largest master limited partnership (MLP), with a market capitalization of $16.6 billion, $39.7 billion in 2015 revenue and $8 billion in 2015 capital investments, and a general partner—Energy Transfer Equity (ETE)—whose once-promising merger deal with Williams Cos. has turned ugly and may well be doomed. ETP’s extensive holdings include several major interstate and intrastate natural gas pipelines, midstream natural gas services, and natural gas liquids (NGL) pipelines and services; it also holds approximately 27.5% of the limited partner interests and all of the general partner interest in Sunoco Logistics Partners (SXL). With ETP’s size, its huge portfolio of midstream assets, and its high-profile general partner, the MLP was an obvious choice for our new Spotlight Report. Today, we provide the highlights of the report, which is available to RBN Backstage Pass subscribers.

The acquisition of Williams Companies by Energy Transfer will create a midstream behemoth. The deal is expected to close during the first half of 2016 subject to regulatory approval. Once complete the main holding company Energy Transfer Corp (ETC) will be a C-Corp entity sitting atop Master Limited Partnerships (MLPs – see Masters of the Midstream for a more complete explanation of these structures) containing the assets of Energy Transfer Partners (ETP), Williams Energy Partners (WPZ), Sunoco LP (SUN) and Sunoco Logistics (SXL). The combined natural gas pipeline network will carry as much as 45% of U.S. Lower 48 dry gas production. Today we take a look at the natural gas infrastructure assets in the deal.