NGI - West Coast Natural Gas Hubs Seeing Winter Basis Rise from the Ashes of Oil’s Fall

May 27, 2020 – Natural Gas Intelligence

West Coast Natural Gas Hubs Seeing Winter Basis Rise from the Ashes of Oil’s Fall

By Jeremiah Shelor

A number of western U.S. demand hubs have experienced notable basis uplift over the past month as the collapse in oil prices has decimated drilling activity and scrambled the Lower 48 supply outlook for the 2020/21 winter, NGI pricing data show…

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Meanwhile, the drop-off in Bakken crude activity could be “creating an opening for long-suffering Canadian gas exports,” according to RBN Energy LLC analyst Martin King.

Major producers in the Bakken “have reacted swiftly” to the dramatic decline in oil prices by stopping operations and shutting in their wells, a trend reflected in the rig data, King wrote in a recent blog post. This has had a knock-on effect on associated gas supplies flowing out of the region.

“Flow data for the three interstate gas pipelines in the Bakken -- Northern Border Pipeline (NBPL), WBI Energy Transmission and Alliance Pipeline -- are showing that natural gas supplies have dropped considerably in the past 50 days,” King said. “The most pronounced drop can be seen for flows into WBI, with its receipts down in the range of 0.4 Bcf/d since late March, a time when oil well shut-ins and oil production declines began to accelerate in response to the oil price collapse.

“Other gas receipt declines, though not as obvious, have also been seen for NBPL and Alliance. The fall in receipts really began to accelerate from the middle of April to early May, with the combined drop being just over 0.8 Bcf/d, or more than one-third of all Bakken gas production receipts compared to the peak in early March.”