reu-2019-03-20 record low natural shale-gas prizes USA
https://www.reuters.com/article/us-natgas-waha-pipelines/get-your-natural-gas-in-texas-for-a-dime-prices-fall-to-record-low-idUSKCN1R11EM?il=0
Get your natural gas in Texas for a dime, prices fall to record low
(Reuters) - Next-day natural gas prices for Wednesday at the Waha hub in
West Texas plunged to a record low due to an equipment failure in New
Mexico that stranded gas in the Permian basin.
FILE PHOTO: A rig contracted by Apache Corp drills a horizontal well in a
search for oil and natural gas in the Wolfcamp shale located in the
Permian Basin in West Texas, U.S. on October 29, 2013. REUTERS/Terry
Wade/File Photo
Spot prices at the Waha hub collapsed to an average of just 12 cents per
million British thermal units (mmBtu) for Wednesday.
That fell below the contract's prior all-time low of 21 cents in February
and compares with an average of $1.72/mmBtu so far this year, $2.10 in
2018 and a five-year (2014-2018) average of $2.80, according to data
available on the Refinitiv Eikon going back to 1991.
The equipment failure was on El Paso Natural Gas Pipeline Co LLC's
Lordsburg and Florida compressor stations. That failure, which caused El
Paso to declare a force majeure, cut the operational capacity through the
stations by about 0.2 billion cubic feet per day to around 0.4 bcfd
starting on Tuesday.
El Paso, which is a unit of Kinder Morgan Inc, said the reduction will
remain in effect until further notice.
The Permian is the biggest oil-producing shale basin in the United States
and since much of that oil comes out of the ground with gas, it is also
the nation's second-biggest shale gas producing region, behind Appalachia
in Pennsylvania, West Virginia and Ohio.
With production of both oil and gas more than doubling to record highs
over the past five years, the pipeline infrastructure in the Permian has
not been able to keep up with the rapid growth in output.
That has caused the basin's existing oil and gas pipes to become
constrained and forced some producers to burn or flare off some of the
gas associated with oil production.
Those gas constraints have trapped gas in the Permian and depressed Waha
prices, boosting the discount Waha trades at below the U.S. Henry Hub
benchmark in Louisiana.
That spread reached $2.79/mmBtu for Wednesday, its widest since December.
That compares with an average discount of $1.21 so far this year, $1.06
in 2018 and a five-year (2014-2018) average of 34 cents.
Several new pipelines are being built or developed to enable more gas to
flow out of the Permian, including Oneok Inc's WesTex and Roadrunner
projects, Kinder Morgan's Gulf Coast Express and Permian Highway projects
and NAmerico Energy Holdings' Pecos Trail.
Drillers will, however, have to wait until late 2019 and beyond for those
projects to enter service.
Reporting by Scott DiSavino; Editing by Chizu Nomiyama