Natural gas originating in Texas and flowing to other states via interstate pipelines increased to a record high 10 Bcf/d last weekend (Dec. 8-9), mostly because of the surging output from the Barnett Shale and East Texas producing basins, according to a report by Golden, CO-based energy consultant Bentek LLC. Texas gas exports jumped 26% compared with the same period a year ago.
Bentek said the gas has been moving eastward on CenterPoint Energy’s new Carthage-to-Perryville pipeline (CP Line). CenterPoint flows have been averaging 1.4 Bcf/d this month, compared with 0.3 Bcf/d last year, which is an increase of 1.1 Bcf/d.
“Volumes moving out of the state on interstate pipelines have been going nuts,” Bentek Managing Director Rusty Braziel told NGI. However, he said it’s not just from one place — “volumes are up all over. A lot of the weakness in [Houston] Ship Channel prices that we saw last month seem to be the result of high production and maxed out flows on many pipes leaving the state.”
Bentek’s Jim Simpson, vice president of operations, said, “In a way, Texas natural gas producers are experiencing a scenario similar to what Rocky Mountain producers were experiencing earlier this year. Production in Texas is at an all-time high, and most outlets moving gas out of East Texas into Louisiana and the Southeast region are full. Certainly the impact on basis is not as dramatic as the Rockies, but the dynamics of the situation are similar. Texas pricing is under pressure from high rates of production.”
It’s a “good news, bad news story,” said Simpson. “Much of this pressure on prices will be relieved when new pipeline capacity comes on line in the first quarter of 2008. Gulf South, NGPL, Trunkline and more CP Line capacity will increase export capacity into Louisiana. The downside for market prices is that this new deliverability will move up to 2.5 Bcf of the surplus into the backyard of the Henry Hub.”
In addition to increased volumes flowing out of East Texas, Bentek’s analyses show increased output moving out of other Texas producing regions this month compared with December 2006:
“The interesting thing to watch in 1Q2008 will be the impact on Henry [Hub] from all that additional gas coming into the state,” said Braziel.
Bentek’s weekly Texas Energy Bulletin provides a continuing assessment of the state’s natural gas production, flows, exports and imports, pricing and demand. For more information go to www.bentekenergy.com or call (888) 251-1264.
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