In booming Permian Basin oil patch, natural gas is sometimes given away

[rangerrebew]

 In booming Permian Basin oil patch, natural gas is sometimes given away
By Rebecca Elliott

Published: Dec 27, 2018 10:12 a.m. ET
 

Producers have had to give away their gas — or even pay for removal — as pipeline bottlenecks worsen
 
Natural gas now helps generate about one-third of U.S. electricity, and it has become a valuable export commodity as ships take liquefied natural gas to Asia and Europe. For those fortunate enough to be near the Permian, like in Midland, Texas, shown here, getting it for nothing has been a boon.

American energy companies have spent billions of dollars in the past decade exploring for natural gas. But in parts of Texas and New Mexico, there is now so much of it that it is sometimes worthless. Some companies have even had to pay buyers to take it away.

Shale drillers in the Permian Basin are producing vast amounts of gas as a byproduct of prospecting for oil CLG9, +1.14%  . But there aren’t enough pipelines to take all the gas to market, causing some of it to become landlocked, and sending local prices into free fall.

https://www.marketwatch.com/story/in-booming-permian-basin-oil-patch-natural-gas-is-sometimes-given-away-2018-12-27

[IsailedawayfromFR]

In booming Permian Basin oil patch, natural gas is sometimes given away
By Rebecca Elliott

Published: Dec 27, 2018 10:12 a.m. ET
 

Producers have had to give away their gas — or even pay for removal — as pipeline bottlenecks worsen
 
Natural gas now helps generate about one-third of U.S. electricity, and it has become a valuable export commodity as ships take liquefied natural gas to Asia and Europe. For those fortunate enough to be near the Permian, like in Midland, Texas, shown here, getting it for nothing has been a boon.

American energy companies have spent billions of dollars in the past decade exploring for natural gas. But in parts of Texas and New Mexico, there is now so much of it that it is sometimes worthless. Some companies have even had to pay buyers to take it away.

Shale drillers in the Permian Basin are producing vast amounts of gas as a byproduct of prospecting for oil CLG9, +1.14%  . But there aren’t enough pipelines to take all the gas to market, causing some of it to become landlocked, and sending local prices into free fall.

https://www.marketwatch.com/story/in-booming-permian-basin-oil-patch-natural-gas-is-sometimes-given-away-2018-12-27

Natural gas sales prices as low as $0 makes sense when the alternative is flaring.

[Smokin Joe]

Natural gas sales prices as low as $0 makes sense when the alternative is flaring.

Especially with governments moving to restrict flaring and the constant push for CO2 restrictions. Better to give it away and use it than to just flare it at the wellhead, otherwise the flaring restrictions will cause restrictions on oil production. The Gas is just a (sometimes marketable) by-product, the oil makes the money.

[IsailedawayfromFR]

Especially with governments moving to restrict flaring and the constant push for CO2 restrictions. Better to give it away and use it than to just flare it at the wellhead, otherwise the flaring restrictions will cause restrictions on oil production. The Gas is just a (sometimes marketable) by-product, the oil makes the money.

I recall when in the 70s I went as a new area engineer for our Freer Texas office(located in the same county of LBJ's first congressional  election by the vote of dead people still on the voting rolls) I was looking into a gas distribution system that had been in place for years.  A field 20 miles to the north produced about 500 mcfd into it from a few weak gas wells.  The end of the line was our field office that used the gas for heating and cooking - likely less than 10 mcfd.  Where was the rest of the gas going?  About 50 people along the line had tapped into the line.

My first job in eliminating the line and putting the office on purchased propane made me persona-non-grata to the locals.  But we did make some money by the sale of the gas instead of a contribution to the community.  Needless to say, I minimized the time I spent in the office in order to lessen the risk of becoming a future Democrat cemetery voter.