Natural gas prices at the Waha hub in the Permian basin in West Texas rose along with Henry Hub futures prices. The move comes ahead of the new Gulf Coast Express pipeline start-up Spot natural gas prices have risen to their highest price since March.
Natural gas prices at the Waha hub in the Permian basin in West Texas rose along with Henry Hub futures prices. The move comes ahead of the new Gulf Coast Express pipeline start-up Spot natural gas prices have risen to their highest price since March.
Kinder Morgan is the owner of thenew Gulf Coast Express pipeline which is expected to enter service over the next month. Gulf Coast Express cost $1.75 billion and will provide much-needed takeaway capacity from the Permian region.
Prices were negative earlier this year with producers flaring record amounts of gas as lack of pipeline capacity to transport record gas being produced in the Permian basin. Deliveries began to flow into the Gulf Coast Express in early August. From there we have seen next-day prices at Waha rise as high as $2.10 per million British thermal units (mmBtu) on Aug. 28, their highest since March, according to data from Refinitiv. That move cut the premium of next-day gas at the U.S. Henry Hub benchmark in Louisiana over Waha to a monthly low of $1.30 per mmBtu in August, its lowest since January when the spread was 92 cents.
The Gulf Coast Express is designed to deliver about 2.0 billion cubic feet per day (bcfd) of gas from the Permian basin east to the Agua Dulce receipt point near the Texas Gulf Coast.
During the first eight months of 2019, Waha spot prices, which touched a record low of negative $9 in April, averaged just 73 cents. That compares with an average of $2.10 in 2018 and a five-year (2014-2018) average of $2.80.
Gas production in the Permian is expected to rise to a record 14.9 bcfd in September 2019, up more than 20% from the same month last year, according to the U.S. Energy Information Administration (EIA) projections.
Gulf Coast Express is the first significant gas pipe to enter service this year. After Gulf Coast Express enters service, Kinder Morgan’s 2.1-bcfd Permian Highway in 2020 and MPLX LP’s 2.0-bcfd Whistler in 2021 are expected to be built. This could further reduce Henry Hub’s premium over Waha.
About Waha
Waha Hub in the northern area of Pecos County, TX. Includes tdeliveries which lie in or near Pecos County: 1.) deliveries from El Paso Natural Gas into various pipelines, including Atmos, Enterprise Texas, Northern Natural, and Oasis; 2.) transactions at Southern Union Gas Services’ Waha/Encina Header; 3.) sales of tailgate gas from Regency Energy Partners’ 125 MMcf/d Waha Gas Processing Plant;4.) deals into the beginning of the Energy Transfer Fuel System; and 5.) transactions in and out of the Enstor Waha Storage Hub, which connects to the same four pipelines as listed in point #1, as well as Oneok West Texas, El Paso, and Transwestern.
Source NGI, Refinitve, Reuters
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