Natural Gas News – June 14, 2018
The Permian Faces A Long Term Natural Gas Crisis
Oil Price reported: The bottlenecks in the Permian have created a widening chasm between not just Brent and WTI, but also WTI in Cushing or Houston and prices fetched for oil in the Permian basin. Oil output continues to soar in West Texas, despite the fact that the region’s takeaway capacity is tapped out. The discount for Midland WTI relative to Houston has surpassed $10 per barrel. “We see further potential downside risks for Midland prices and differentials versus the [U.S. Gulf Coast] and Brent,” Bank of America Merrill Lynch said in a note. The crude bottleneck could be temporary, however, with a series of new pipelines set to come online next year. That could narrow the discount and perhaps even eliminate it. Bank of America Merrill Lynch goes further, arguing that the export push could open up a premium for Permian oil. “Beyond 2019, excess Permian takeaway capacity could push the Midland-Cushing differential positive as take-or-pay commitments pull barrels directly to the USGC for export,” the bank said.
U.S. LNG: Fulfilling A Strategic Role In Transatlantic Trade
Oil Price reported: Europe’s liquefied natural gas imports have surged sixteen percent to become the third largest source of gas supply after Russia and Norway. The re-emergence of Europe as a major LNG market came after years of coal and nuclear power plant retirements as well as steep declines in Europe’s largest onshore natural gas field in the Netherlands. In global gas markets, Europe looks like a bright star in terms of commercial opportunities over the next few years, as growing demand coincides with rising prices and strong imports. The United States, with four new LNG projects under construction, is in excellent position to seize the opportunity as a supplier in this dynamic market and assert the strategic role as it challenges Russia’s dominance as the region’s top gas supplier.