Where Do We Go From Here? - The Potential for Intrastate Gas Pipeline Expansions at Waha

The basis blowout at the Waha Hub in the Permian Basin arrived in full force over the last few weeks, with natural gas prices reaching discounts to the Henry Hub not witnessed since 2009. Available takeaway capacity has been quickly eroding on the existing pipeline corridors out of the basin, leaving many in the market pondering where all the incremental gas production will go before a new greenfield expansion pipe relieves the market in late 2019. Last week, a partial answer came in the form of a pipeline expansion project by Enterprise Products Partners and Energy Transfer Partners slated for completion later this year. While the project’s estimated size is far too small to preclude additional greenfield pipelines beyond 2019, it does highlight the attractive economics of brownfield expansions on the Texas intrastate pipelines at Waha. Today, we analyze announced and possible intrastate pipeline projects around Waha.

NATGAS Permian Report

The NATGAS Permian Report is a weekly natural gas fundamentals analysis focusing entirely on the key market drivers within the Permian basin. The report contains details and forecasts around natural gas production, demand, and pricing. It offers a summary of pipeline outflows and capacities from the Permian to neighboring regions, outlining the key shifts in flows to the West, MidCon, and Texas intrastate markets. 
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Permian Basin natural gas has been the subject of many blogs for us at RBN over the last 18 months. Just a few days ago, we provided an update on Waha basis in Blame It On Texas, which was preceded by an update on Permian gas outflows to the Midcontinent in our Omaha blog in April. Back in January, we looked at natural gas pipeline takeaway capacity and planned expansions in Help on the Way. Last fall, we analyzed Permian natural gas flow patterns and prices in Witchy Waha. Finally, last summer we did a four-part series on Waha that we then summarized in a Drill Down Report. That’s a lot of blogs, and you may be wondering why we are back again so quickly. But the recent blowout in Waha basis has spurred talk of new gas pipeline takeaway options bubbling to the surface. Figure 1 shows the average monthly Waha basis (2015 to year-to-date 2018), which has been falling like a rock since the first of the year, slumping to $0.92/MMBtu under Henry Hub since April 1, and hitting minus $1.42/MMBtu on April 25.

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