Page 5 - NorthAmOil Week 36

NorthAmOil COMMENTARY NorthAmOil
Permian and has received commitments from a number of shippers.
Gulf Coast Express will mark the first addi- tion to Permian gas takeaway capacity since the start of this year. Other projects are set to follow, with several large projects with a similar capacity of around 2bn cubic feet per day also currently under development. While some proposed pipe- lines may not yet go ahead, the Permian High- way and Whistler pipelines – with capacities of 2.1bn cubic feet per day (59mn cubic metres) and 2.0bn cubic feet per day respectively – have reached the final investment decision (FID) stage. Permian Highway is due to enter service in 2020, with Whistler following in 2021.
Natural gas spot prices at the Waha Hub in Texas have risen to their highest level since March to coincide with the new pipeline capac- ity additions. The differential between prices at Waha and the benchmark Henry Hub price has narrowed significantly. The price increase will provide much-needed relief to drillers after Waha prices fell into negative territory earlier this year.
What next?
Gas production in the Permian should also bene- fit from the expansion of LNG export infrastruc- ture along the Gulf Coast. Indeed, the Permian Highway and Whistler pipelines are planned to meet growing demand for feedstock gas from LNG exporters in the region. Two FIDs have been made so far this year on new LNG export facilities on the coast, and more developers hope
to follow. Construction will take time, but with two plants entering service in the last month, as well as new capacity being added to existing ter- minals, demand for gas from LNG developers is constantly rising. And pipeline operators are taking steps to connect Permian producers and coastal liquefaction infrastructure.
The picture for oil could be more compli- cated. With further crude pipeline capacity addi- tions still coming online, there are concerns that there may now be too much takeaway infrastruc- ture planned. Meanwhile, ports – particularly Corpus Christi – look set to continue grappling with a glut of Permian oil that has moved some way out of the basin and onto the coast. The race is on to build new crude export terminals in the Corpus Christi area and nearby, with at least eight operators having proposed plans for new facilities. In particular, operators are look- ing at options for building terminals that will be capable of accommodating Very Large Crude Carriers (VLCCs), which can transport up to 2mn barrels. Currently, the Louisiana Offshore Oil Port (LOOP) is the only US port able to fully load a VLCC without the need for lightering from smaller vessels.
Federal applications have been filed for five of the proposed new terminals. Not all are likely to proceed, but those developers that can move quickly in the coming months and years will be at an advantage. Among these is Enterprise Products Partners, which signed a long-term agreement with Chevron in late July in support of its FID on a terminal off the Texas coast.™
The race is on to build new crude export terminals in the Corpus Christi area and nearby.
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