Updates
February 3, 2020: from RBN Energy today --
When it comes to Texas natural gas markets, the Permian tends to steal the show. With its roughly 2 Bcf/d of annual production growth, constrained pipelines and absurdly cheap — sometimes even negative — pricing, it’s hard for the other gas hubs in the Lone Star State to garner much attention.
However, the myopic focus on West Texas overlooks a noteworthy gas market shake-up taking place on the Texas Gulf Coast, where most of the Permian’s incremental gas production is headed and where multiple new liquefied natural gas facilities are coming online to move the new supplies into world markets. Also, new export pipelines are moving increasing volumes south of the border to Mexico.
Today, we provide an update on the latest in Texas Gulf Coast gas infrastructure changes and their potential impacts on the region’s supply and demand balance.Later, 6:16 p.m. CT: a reader responded to the chart and the comments below:
You are 100% correct that the associated gas from the Permian, Bakken, SCOOP/STACK, and, even the Niobrara greatly threaten present operations in the Appalachian Basin.Heck, the massive, 52 Trillion cubic feet Barnett resource is barely being drilled and that is right in Texas.Better pipelines heading north from the Appalachian Basin would help as will an increase in LNG exports.Strong political/social joy up there if it all shut down tomorrow.Determining factor will be cost of production.
Toby Rice is striving to be viable at $2 Henry Hub.
I think he - and EQT - will succeed, along with several others.
But not every Appalachian Basin operator will exist in current form in future years absent dramatic - and unlikely - bump in pricing.
I was talking to another person about the natural gas "issue" in the US right now. That was yesterday.
Today, I caught this graph on twitter (find the original data at EIA: https://www.eia.gov/naturalgas/crudeoilreserves/). From that link:
Another year of stronger oil and natural gas prices increased 2018 oil and natural gas proved reserves in the United States to another all-time record level.
Crude oil and lease condensate proved reserves rose by 12%, and natural gas proved reserves rose by 9%. U.S. crude oil and lease condensate production increased by 17%, and U.S. total natural gas production increased by 12%.
That's exactly what I said in that conversation yesterday. Comments:
- red arrows: crude oil plays
- blue arrows: natural gas plays
- red arrows: surprisingly large jump in natural gas growth, considering these are generally considered to be oil plays
- blue arrows: having trouble competing with oil plays' production of natural gas
- on top of that, natural gas from the Permian is perfectly located for export
- in the northeast, politicians are pushing back on natural gas production
- I think most agree that sub-"$2-natural-gas" is not viable
- I don't think anyone saw this coming but natural gas plays are competing not among themselves, but with oil plays for natural gas production
- growth in Texas natural gas production was greater than West Virginia, Pennsylvania, and Ohio combined
Belarus is a landlocked country, so curious how we are going to get them LNG (or oil for that matter). Pipe it through Lithuania? Is there even good connectivity?
ReplyDeleteFor that matter, oil is world priced and very fungible. And there's a cheap spot market for gas in Europe as well. Issues are not the commodity itself coming from us (versus the world spot market), but connectivity. If the only supply pipes are from Russia, than that's the problem.
Honestly, these articles that say "America will supply the gas" are very silly. And no, we can't supply it for half of spot price.
This comment is in reply to an earlier post, so I've brought the comment over to that post:
Deletehttps://themilliondollarway.blogspot.com/2020/02/more-evidence-that-us-is-new-swing.html.
Poland and the US have a very, very close relationship. And, then, of course, there's the Ukraine. Lots of options.
The bottom line is that the US is working with Belarus to help solve their problem.
Twitter handle who posted graph?
ReplyDeleteMust have been fake news; I can't find it on twitter any more. That happens not infrequently: something is on twitter and then disappears.
DeletePossible from #OOTT.
Regardless, the story can be found over at the EIA at this site:
https://www.eia.gov/naturalgas/crudeoilreserves/.
No worries, but a link to the Twitter is nice because sometimes there are comments on the story.
DeleteI'll try to remember next time; to capture the twitter link. There's a reason I don't often capture the twitter link -- it slows me down, but I will see if I can do better.
Delete