Spot natural gas prices for Wednesday flow at Waha and nearby delivery hubs in West Texas fell into negative territory as pipeline maintenance prevented some gas from leaving the basin and mild, spring-like weather reduced demand.
Waha Hub spot prices for next-day delivery tumbled 72.0 cents day/day to minus 54.5 cents. The last time Waha’s spot averaged in the negatives was on Oct. 24, 2023, at minus 24 cents, NGI’s daily historical data show.
Elsewhere in the region, an 81.5-cent loss at El Paso Permian sent the average to minus 52.0 cents, and Transwestern tumbled 63.5 cents to minus 53.5 cents, according to NGI daily spot gas price data.
Market participants suggested pipeline maintenance likely pushed prices lower in the Permian Basin, as several pipelines responsible for carrying gas from the basin to other demand centers are currently or would be running at limited capacity.
Criterion Research LLC analyst James Bevan told NGI the West Texas price routing overall looked like it was driven by pipe maintenance on intra- and interstate pipelines, including the Whistler Pipeline and Permian Highway Pipeline LLC (PHP) this week and an expected outage at Gulf Coast Express in April or May.
The 2.65 Bcf/d capacity PHP brings gas from the Waha area of the Permian east to the Katy area near Houston, supplying Gulf Coast demand markets. PHP notified customers of planned repairs at Praha Compressor Station that would limit capacity on Wednesday. The pipeline was expected to resume full service by Thursday.
MPLX LP’s Whistler transports natural gas from an interconnect with the Waha Header near Coyanosa, TX, in the Permian to a terminus near Agua Dulce, providing direct access to South Texas markets and consumers.
Both pipelines are intrastate and have no federal reporting requirements. However, Kinder Morgan Inc. confirmed Wednesday’s PHP maintenance via its electronic bulletin board.
With less gas able to make its way out of West Texas, “Waha bleeds,” said a participant in a discussion on the online energy platform Enelyst.
Ahead of the expected outages, Wood Mackenzie data Tuesday showed a 660 MMcf/d reduction in Texas pipeline flows, including declines of about 400 MMcf/d in the South and 130 MMcf/d in the East.
In the South, Texas Eastern Transmission Corp. began maintenance between the Tivoli and Blessing compressor stations, reducing northbound capacity by about 132 MMcf/d until March 14. Additionally, Tennessee Gas Pipeline Co. LLC began a one-day event at MLV 9-1 to MLV 1-1 for pig run maintenance that restricted flows.
Wood Mackenzie said declines in East Texas were concentrated on Natural Gas Pipeline Co. of America LLC’s intrastate pipelines and Gulf South Pipeline Co. LLC’s interstate lines. However, the firm said no maintenance events were posted in the area.
The limits on takeaway occur even as both PHP and Whistler have recently expanded their systems, adding a little more than 1 Bcf/d since September. The next significant increase in Permian takeaway is expected to be the greenfield Matterhorn Express Pipeline, which is under development by MPLX LP and WhiteWater Midstream LLC. That project is scheduled to come online later this year, adding around 2.5 Bcf/d of egress.
While pipeline capacity limitations trapped natural gas within the region, Snapper Creek Energy analyst Kyle Cooper told NGI, “High associated gas production and relatively strong wind and solar” generation throughout the Electric Reliability Council of Texas, the state’s grid operator, could have contributed to the hostile prices across West Texas.
The region is drowning in supply as demand across the United States remains weak because of mild weather.
“Very light national demand” is expected through Friday as “perfect highs of 60s to 80s rule the southern and eastern halves of the country,” NatGasWeather said Tuesday.
A weather system over the western United States would span across the central and southern reaches by the weekend, bringing highs of 40s and 50s and lows in the 10s to 30s. The cooldown would drive a modest increase in demand, “but still below normal due to very little subfreezing highs over the United States,” the firm said.
NatGasWeather said the warm ridge would return and bring temperatures back to the 50s to 80s for most of the southern and eastern halves of the country March 12-17.
In addition to much too warm weather patterns most days through the middle of March, wind energy generation across the country would be “decently strong most days.”
