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Natural Gas Production In The Permian Hit Record Highs In 2021

Natural Gas Production In The Permian Hit Record Highs In 2021

According to the US Energy Information Administration, marketed natural gas output from the Permian Basin in western Texas and eastern New Mexico set a new annual high of 16.7 billion cubic feet per day (Bcf/d) in 2021.

According to the EIA, the Permian Basin’s yearly marketed natural gas production has been gradually increasing since 2012.

After the Appalachian Basin, which spans Pennsylvania, West Virginia, and Ohio and generated an average of 34.8 Bcf/d of marketed natural gas in 2021, the Permian Basin is the second-largest shale gas-producing region in the United States.

In contrast to the Appalachian Basin, where natural gas is produced through natural gas wells, the Permian Basin produces the majority of its natural gas from associated gas produced from oil wells. As a result, producers in the Permian Basin arrange their exploration and production activities in response to crude oil price swings, including whether to deploy drilling rigs or shut them down.

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Amid increased crude oil prices from mid-2017 to the end of 2019, the number of drilling rigs operating in the Permian Basin remained high and peaked at an average of 492 rigs in November 2018. In 2020, both crude oil prices and drilling rigs are expected to fall.

The West Texas Intermediate (WTI) price rose substantially in 2021, averaging $68 per barrel for the year, up from $39 per barrel in 2020, and has continued to rise in 2022. The number of rigs operating in the basin has also increased throughout this time.

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Pipeline takeaway capacity expansions make natural gas production and transport easier. According to PointLogic, the Permian Basin’s pipeline takeaway capacity will reach 18 Bcf/d in May 2022.

In 2021, three new projects — Kinder Morgan Energy Partners’ Permian Highway Pipeline in January, WhiteWater’s Whistler Pipeline in July, and Summit Midstream Partners’ Double E Pipeline in November – came online, totaling 5.5 Bcf/d of takeaway capacity.

Producers can now transmit natural gas to demand areas in Mexico and along the Texas Gulf Coast, including LNG export terminals, thanks to the increased capacity.

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Several pipeline projects have recently been announced that, by the end of 2024, will bring about 5.0 Bcf/d of pipeline takeaway capacity out of the Permian Basin. Kinder Morgan Energy Partners, WhiteWater, and Summit Midstream Partners have all announced expansion plans for their respective 2021 pipeline projects, which will add 1.8 billion cubic feet per day of capacity.

Kinder Morgan also aims to extend the Gulf Coast Express Pipeline by 0.6 Bcf/d by the end of 2023, while EnLink Midstream has received a letter of intent to build the Matterhorn Express Pipeline, which will add 2.5 Bcf/d of takeaway capacity by the fourth quarter of 2024.

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