Permian Basin natural gas production is growing at a torrid pace. After starting 2017 just below 6 Bcf/d, production is set to breach the 8-Bcf/d mark soon on its way to 10 Bcf/d by the end of 2019. Pipelines flowing out of the basin are coming under increasing strain, and just about every single gas pipeline leaving the Waha hub in West Texas is now being utilized at levels not witnessed in years — if ever. Even routes north from the Permian to the Midcontinent and Midwest markets, traditionally only attractive on the coldest winter days, are starting to look viable year-round. Today, we look at recent gas-price and flow trends in the Permian natural gas market.
Natural gas flows and market dynamics are shifting at national benchmark Henry Hub. Supply receipts at Henry this year to date have doubled since the comparable period last year to nearly 450 MMcf/d, on average. That’s also a five-fold increase from the same period in 2016. In fact, current gas flows through the hub are the highest we’ve seen since 2009. The last time we saw this level of flows through the hub was when Gulf of Mexico offshore gas production volumes — much of which hit the U.S. pipeline system in southern Louisiana — were still topping 6.0 Bcf/d. That was also before the Marcellus/Utica Shale gas supply ballooned, effectively emptying out the pipeline capacity that used to flow gas north from the Gulf Coast. Now, many of those pipelines have reversed flows and the hub is showing signs of becoming a destination market for that Northeast gas and other supply targeting LNG export demand on the Gulf Coast. Today, we continue our short series looking at the changing physical flows at Henry Hub.
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.
Natural gas deliveries for export via Cheniere Energy’s Sabine Pass LNG terminal in Louisiana reached a record in late July, topping 2.5 Bcf/d. In the first seven months of 2017, exports have added an average of 1.5 Bcf/d — or more than 300 Bcf total — of baseload gas demand year on year. Thus far, the terminal has been operating with three liquefaction trains. Now the fourth train, which would bring on another 650-MMcf/d of potential export demand, is nearing completion. The incremental gas deliveries are scheduled to come just as winter heating season is kicking off and likely will tighten the gas market. Today, we look at the latest developments at the terminal.
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.
U.S. LNG exports via Cheniere Energy’s Sabine Pass LNG export facility are poised to be a major demand driver of the domestic natural gas market in 2017. Pipeline deliveries to the terminal have more than tripled since mid-2016 and are set to climb further as more liquefaction capacity ramps up. With two liquefaction trains already operational, the Federal Energy Regulatory Commission last month approved Train 3 to begin operations and also green-lighted the start-up of Train 4 commissioning. Today, we provide an update of Sabine Pass’s export activity and its potential effect on U.S. gas demand this year.
Cheniere Energy last Friday announced it has signed precedent agreements (firm capacity deals) with foundation shippers for its 1.4-Bcf/d Midship Pipeline project, which is targeted for an early 2019 in-service date. The announcement marks the latest milestone for midstream companies looking to move natural gas production from the SCOOP/STACK shale plays in central Oklahoma to growing demand markets in the Southeast and along the Texas Gulf Coast. Production from SCOOP and STACK grew by 1.0 Bcf/d, or 60%, in the past three years to 2.7 Bcf/d in 2016 and is expected to grow by another 1.5 Bcf/d by 2021. Besides Midship, there are other projects vying to move SCOOP/STACK gas to market. But how much capacity is really needed and by when? Today we look at the Midship project and its role in alleviating potential takeaway constraints.
Northeast producers are about to get a new path to target LNG export demand at Cheniere Energy’s Sabine Pass LNG terminal. Cheniere in late December received federal approval to commission its new Sabine Pass lateral—the 2.1-Bcf/d East Meter Pipeline. Also in late December, Williams indicated in a regulatory filing that it anticipates a February 1, 2017 in-service date for its 1.2-Bcf/d Gulf Trace Expansion Project, which will reverse southern portions of the Transcontinental Gas Pipe Line to send Northeast supply south to the export facility via the East Meter pipe. Today we provide an update on current and upcoming pipelines supplying exports from Sabine Pass.
Since the first LNG ship left its dock in February, Cheniere’s Sabine Pass LNG terminal has exported 17 cargoes containing the super-cooled, liquefied equivalent of over 50 Bcf of natural gas from the first of six planned liquefaction “trains.” And in a monthly progress report filed with the Federal Energy Regulatory Commission last month, Sabine Pass said it expected to begin loading a commissioning cargo from Train 2 in August, with commercial operation of that facility starting as early as September. In today’s blog we provide an update of Sabine Pass’s export activity, as well as the impact on the U.S. gas flows and demand.
After years of debate and speculation regarding prospects for U.S. exports of liquefied natural gas (LNG), the first cargo left the Gulf Coast around 8:30 pm EST Wednesday (February 24, 2016) from Cheniere’s Sabine Pass terminal, according to Genscape’s global LNG cargo monitoring service. The vessel carrying a little more than 3.0 Bcf of LNG is reportedly bound for Petrobras in Brazil. The incremental export demand that this LNG cargo and others like it to follow represent, is potentially good news for U.S. gas producers, with benchmark futures prices at Henry Hub, LA closing yesterday (February 25, 2016) near record seasonal lows at $1.711/MMBtu in the face of mild winter demand, record production and brimming storage levels. Today we look at how this first cargo was supplied and what that tells us about current and future impact to flows and regional prices.
There was a lot of hand wringing and gnashing of teeth last week in energy markets, and it had nothing to do with the OPEC non-event. Instead, the focus was Kinder Morgan (KMI), granddaddy of U.S. midstream companies, and usually a darling of analysts and media. Not this time. Over the past few days the stock has been hammered, Moody’s downgraded its debt, and a lot of folks in the market have been trying to figure out what is going on. Particularly since all the hubbub would seem to be about a relatively minor investment (in energy infrastructure terms) in a pipeline called Natural Gas Pipeline of America, or NGPL, one of the oldest of the long-line systems in the U.S., which came online 84 years ago and Kinder Morgan has owned all (or part of) since 1999. In today’s blog, we look at this pipeline system and what it tells us about the current state of the natural gas markets.
The site of Cheniere Energy’s new liquefied natural gas (LNG) export terminal in Corpus Christi is only a short drive from the heart of the Eagle Ford. But for supply diversity’s sake, Cheniere won’t depend only on Eagle Ford gas for supply—far from it, in fact. Plans are in the works to enable Corpus Christi LNG’s five planned liquefaction “trains” to access gas from a wide variety of shale plays and basins, in some cases moving gas long-distance. Today, we continue our look at the challenges of securing and moving huge volumes of gas to LNG export terminals, the emerging epicenters of U.S. gas demand.
The start-up of Sabine Pass, the first liquefied natural gas (LNG) export terminal in the Lower 48, is only months away, and the complicated gas-delivery logistics behind the project are coming into focus. Surely one of the biggest challenges has been assembling the long-haul pipeline capacity needed to move several billion cubic feet of gas a day (Bcf/d) to Sabine Pass from deliberately diverse sources as far away as the Marcellus/Utica. After all, the nation’s pipeline network was initially designed to move gas from the Gulf Coast to the Northeast and Midwest, not vice versa. Today, we continue our look at the challenges of securing and moving huge volumes of gas to LNG export terminals, the emerging epicenters of U.S. gas demand.