Permian Gas Output Up, Prices Lagging
The US Energy Information Administration (EIA) said July 18 Permian Basin gas production was higher in June, but the discount at the Waha hub relative to Henry Hub continued to widen, reaching more US$1/mn Btu as pipeline capacity out of the basin remained constrained.
Permian Basin production – largely associated with crude oil production – averaged 10.4bn ft3/day in June, the EIA said in its Today in Energy report, 2.1bn ft3/day higher than in June 2017. The Waha Hub average price, however, was less than $2/mn Btu in June, while Henry Hub averaged close to $3/mn Btu.
Prices at Waha, the EIA said, will remain constrained until new pipeline capacity out of the basin is completed.
Two pipelines – Comanche Trail and Pecos Trail, with a combined capacity of 2.6bn ft3/day – were completed in 2017 to export Permian natural gas to Mexico, but neither are expected to see significant flows until later this year or early next year when downstream infrastructure in Mexico enters service.
In Mexico, TransCanada this week placed its Topolobampo Pipeline into service, enabling exports to Mexico from the US via either the Tarahumara pipeline, operated by Mexican gas transport firm Fermaca, or Sempra Energy’s Ojinaga-El Encino pipeline. Flows on the 670mn ft3/day Topolobampo line, however, will remain constrained until downstream power generation facilities are completed, according to Mexican media reports.