From RBN Energy over the weekend: outlook for Permian gross gas production vs processing capacity, part 3.
... the latest source of turmoil in the Permian gas market: pipeline maintenance that sent spot gas prices at Waha Hub, the region’s benchmark trading point, to negative territory last week for the first time in two years — an indication of just how vulnerable and sensitive the basin is to midstream constraints.
... briefly summarize, two major takeaway pipelines — Kinder Morgan’s Gulf Coast Express (GCX) Pipeline and Kinder’s El Paso Natural Gas (EPNG) system — conducted maintenance last week, and the partially overlapping events took as much as 1.3 Bcf/d of takeaway capacity offline at one point. With power demand and exports to Mexico in a seasonal slump, the capacity cuts hit Waha hard — absolute prices settled below zero for the flow days October 26-27. Intraday prices traded just below negative $2/MMBtu at times and averaged as low as minus $1.165/MMBtu for gas day October 27. The price disruption had various knock-on effects, including encouraging more ethane recovery and raising concerns of increased gas flaring.
The maintenance events wrapped up by October 28, and cash for the weekend package rebounded to more than $3/MMBtu, according to the Natural Gas Intelligence (NGI) Daily Gas Price Index. However, the outages provided a good preview of just how little spare pipeline capacity is available on the intrastate pipelines leaving the basin and underscored the likelihood of additional negative price events occurring before more pipeline capacity comes online next fall, particularly if multiple maintenance and market events converge as they did last week.
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