The Matterhorn Express pipeline, expected to help unclog the Permian Basin’s natural gas bottleneck for the next two years, has started flowing, according to one of the region’s E&P executives.
While a positive development for producers, the small amount of gas being moved has a ways to go before addressing the commodity’s regional price problems.
During a Sept. 3 presentation at the Barclays 38th Annual CEO Energy and Power Conference, Permian Resources co-CEO Will Hickey mentioned that a small amount of natural gas was flowing on the Matterhorn Express.
Hickey was discussing the negative natural gas prices at the regional Waha pricing point located near Pecos, Texas, when he dropped the news.
“[Waha price] been about as bad as it's ever been over the last few weeks,” he said. “But Matterhorn is online, moving little bits of gas and coming online in a real way over the next month or two.”
The Matterhorn Express is a joint venture between Whitewater Midstream, EnLink Midstream (recently acquired by ONEOK), Devon Energy and MPLX. At capacity, the line will be able to move 2.5 Bcf/d of natural gas from the Permian region to the Houston area.
The Permian is a crude-focused basin with associated gas produced as a byproduct of oil operations. In a shale play, the ratio of natural gas to oil increases as the well ages. Permian natural gas pipeline egress has been at capacity since the latter half of 2023.
That’s led to a lot of gas with nowhere to go.
As a result, the Waha Hub has set several records of dubious distinction over the past few months. Most recently, prices set a record daily average low of -$4.80/MMBtu on Aug. 30, about a week after hitting a record 26-day streak of negative prices.
For the past several weeks, analysts predicted the Matterhorn was nearing an in-service date. While gas may have started flowing on the line, it isn’t yet enough to make a dent in local prices.
“After trading back as far as -$8.60 last week, Waha cash basis improved to -$4.15 (on Sept. 4), while Katy and HSC (Houston Ship Channel) prices were relatively unchanged,” wrote TPH&Co. analyst Zack Van Everen in a commentary of the news. “This points to only a small amount of gas moving at this time.”
Once the line is fully in service, Everen said, the Waha price should move back into sustainably positive territory, while the prices at the Houston-area hubs should decline.
The new pipeline is expected to relieve congestion out of the area until 2026, when the recently announced 2.5 Bfc/d capacity Blackcomb Pipeline is expected to come online.
The line will be a real relief for Permian E&Ps. Hickey said natural gas rarely provides more than 5% of Permian Resources’ revenues “on a good day,” but even 5% is a decent contribution to his company’s bottom line.
“And, frankly, we’d like to sell gas for more than zero,” he said.
Recommended Reading
Enbridge Embraces AI to Advance Operations with Microsoft Tools
2024-10-09 - Enbridge, which has been at work on a software modernization project since 2020, is collaborating with Microsoft for improvements to efficiency and emissions reductions.
AI: Herald of New Shale Age or Last-ditch Effort to Save Industry?
2024-10-03 - AI’s ability to optimize may usher oil and gas into a new age—or simply improve on past unconventional recovery methods—depending on who you talk to.
APA, Palantir Expand Partnership to Deploy New AI Across E&P Operations
2024-09-25 - APA Corp. will introduce new AI capabilities to its oil and gas operations with Palantir Technologies’ Artificial Intelligence Platform (AIP) software.
ZEMA Global to Acquire Morningstar’s Commodity Data Business
2024-09-23 - ZEMA Global Data Corp. is acquiring Morningstar Commodity Data to meet demand for data and analytics prompted by the global energy transition.
SLB Launches New GenAI Platform Lumi
2024-09-17 - Lumi’s machine learning capabilities will be used to enhance SLB’s Delfi digital platform offering for better automation and operational efficiencies.
Comments
Add new comment
This conversation is moderated according to Hart Energy community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team.