Permian Basin LNG price was increased at the Waha hub in Western Texas last month ended by 1.55/mmBtu (million British thermal units) last month. Increased amount corresponded with the GCX (Gulf Coast Express) pipeline that reported will resume its operation that produces 2 billion cubic feet/day (Bcf/d) worth of LNG. Gulf Coast Express will support Western Texas and Southeastern New Mexico natural gas takeaway pipeline.
The limited capacity of gas pipeline takeaway from western Texas lately, prices have remained low, or even in negative. Even during H1 (until August) of 2019, the Waha spot price averaged only 65¢/mmBtu. The Waha spot value was always weaker than the Henry Hub spot price, as Henry regarded as the national benchmark price for natural gas.
The difference between Henry-Waha hub spot price has lowered significantly with Waha showed 59¢/mmBtu lower than the Henry last Thursday, which was the smallest gap on a daily basis since January. In contrast, the difference was between $2 - 3/mmBtu between Q1 and Q2 of 2019.
This latest spike for Waha natural gas price coincides with the GCX flows that distribute to the pipeline starting August 8th. Market research revealed that shipments to El Paso Natural Gas Pipeline had achieved almost 0.26 Bcf/d on August 14th.
Industry studies have found that this amount implies that GCX is preparing its lines in advance of commencing operation late next month, ahead of its announced October 1st on-stream deadline. Once fully restored, the pipeline will supply roughly 2.0 Bcf/d of natural gas to Agua Dulce close to the Gulf Coast of Texas.
After GCX brought online, various new natural gas pipelines prepared from Permian - Gulf Coast that could trim-down Waha-Henry price gap, the natural gas pipeline including:
- Permian 2 Katy producing 1.7 - 2.3 Bcf/d
- Permian Highway producing 2.1 Bcf/d
- Permian Pass producing 2.0 Bcf/d
- Permian Global producing 2.0 Bcf/d
- Whistler producing 2.0 Bcf/d
- Bluebonnet Market Expres producing 2.0 Bcf/d
- Pecos Trail producing 1.9 Bcf/d
Based on projects listed above, only Permian Highway and the Whistler that has reached the Final Investment Decision (FID) and expected to come on stream by 2020 - 2021 accordingly. These plants were to supply developing gas demand with Gulf Coast demand, especially at its export LNG facilities.
