The Opener, T+18 -- Texas: Destination Market For American Natural Gas? -- RBN Energy -- February 17, 2017

Active rigs:

	2/7/2017	02/07/2016	02/07/2015	02/07/2014	02/07/2013
Active Rigs	40	42	136	192	184

RBN Energy: Agua Dulce basis headed higher to draw gas south, last in a 4-part series.

As natural gas exports to Mexico continue to rise and as construction proceeds on Texas liquefaction/LNG export terminals, the day is approaching when Texas will flip from being a net producing region to being (with exports) a net demand region.

Fortunately, supplies from elsewhere are readily available to meet that demand—sourced from the Marcellus/Utica and moving on new and reversed pipeline capacity to the Gulf Coast.

A good portion of that gas must traverse “miles and miles of Texas” to meet the burgeoning export demand at the Agua Dulce hub near Corpus Christi, a location that is emerging as a key pricing point for the South Texas gas market.

But a potential problem is looming: There may not be enough pipeline capacity available to meet that demand, with important implications for South Texas prices, flows and natural gas export volumes. The average annual basis at Agua Dulce could increase to as much as a dime ($0.10/MMbtu) above Henry Hub in 2020 from its historical level $0.02/MMbtu to $0.05/MMbtu below Henry.

Based on RBN’s Growth Scenario price outlook, we see the basis at HSC (that is the premium for gas at the Ship Channel) averaging $0.025/MMbtu above Henry Hub in 2020, and the Agua Dulce price could average as much as $0.075/MMbtu above HSC, resulting in an outlook for Agua Dulce pricing of a staggering $0.10/MMbtu above Henry. This assessment assumes that no additional pipeline capacity will be added into the Agua Dulce hub region. If capacity constraints into the Agua Dulce hub are relieved, then the prospects for this large spread between Agua Dulce and HSC diminish significantly.

It is a fascinating reversal of fortunes for what was for years a distant backwater of the natural gas market. South Texas is poised to become one of the most attractive destination markets for natural gas in North America.

Scott Adams: Sam Harris induces cognitive dissonance in Ben Affleck.

Coming to America:

Coming To America, Neil Diamond