Natural gas production in the Permian Basin will soon be on the rise, a new report projects.
“Gas output from the Permian Basin is expected to rebound relatively quickly in the second half of 2020 and will remain robust for years to come,” according to a projection by Rystad Energy, an independent research and business intelligence company.
Both the Permian Highway Pipeline (PHP) and the Whistler project are moving ahead, the company said.
“Earlier this year, Kinder Morgan faced some regulatory obstacles which have delayed the originally planned in-service date for the PHP,” Rystad said in a release. “In the current environment, the regional supply-demand balance does not require the immediate completion of the pipeline. Even if modest delays occur, Permian’s dry-gas production potential will be able to wait for the pipeline to be completed until late-2021.”
The Whistler pipeline “recently received new funding, which confirms that project-related work on the pipeline is occurring,” Rystad said.
However, the outlook is less optimistic for other proposed pipelines, such as Pecos Trail and Permian-to-Katy.
“The Pecos Trail evaluation is now on hold, and the Permian to Katy (P2K) pipeline appears to be inactive,” Rystad said. “Tellurian has continued to advertise its future global gas market hub around Driftwood LNG, the Permian Global Access pipeline, but the likelihood of any investment decisions in the short-term remains low from our perspective.”
COVID-19 has created a “low-investment environment,” the company said. That will likely “postpone approvals for important key pipelines which may necessitate increased flaring from 2023 onwards,” Rystad said. Flaring occurs when natural gas is brought to the surface but can’t immediately be sold.
Even so, by late 2021, Permian gas output should be back at records levels, reaching 16 billion cfd, a measurement unit, by the end of 2023, the projection said.
However, that is down 2 billion cfd from Rystad’s projection before the COVID-19 pandemic struck.