Permian Basin gas samples reached an all-time high in November 2023 as new infrastructure lifted supply on several pipelines. The apparent increase in production is the latest bearish sign for natural gas markets.
Receipts from interstate pipelines in the Permian Basin averaged 6.3 Bcf/d in November, a 3.4% increase from October, according to pipeline samples tracked by East Daley Analytics. The November average is the highest in pipeline samples dating to 2019 (see chart).
Gains on pipelines delivering to California and the Southwest region drove most of the gains in November. Westbound flows on Kinder Morgan’s (KMI) El Paso Natural Gas system also reached a record high on the month. Permian flows on El Paso averaged about 2.4 Bcf/d, up 10% vs the previous 4-month average. The Transwestern Pipeline also saw higher M-o-M throughput from Permian shippers.
Increased shipments are helping keep Southern California border prices in check as the heating season begins. A year ago, westbound flows on the El Paso system were nearly 30% lower due to the Line 2000 outage from the Permian. Southern California border prices jumped to over $40 last winter when the supply restrictions combined with below-normal temperatures on the West Coast.
The increased flows in November may be linked to the expected start of a 0.5 Bcf/d expansion of Permian Highway Pipeline (PHP). PHP operator KMI had targeted start-up of a compressor expansion at the start of December ’23.
East Daley’s Permian Basin Supply and Demand Forecast models Permian residue gas production to exit 2023 at 17.4 Bcf/d, a Y-o-Y increase of 2.3 Bcf/d. New natural gas processing and pipeline expansions like the PHP project have supported higher supply in the second half of 2023. Whistler Pipeline also completed a compression expansion in September, adding 0.5 Bcf/d of takeaway to the Gulf Coast. – James Taylor Tickers: KMI.
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