Moody's: Gas pipeline shortages will hamper Permian producers through 2020

[thackney]

Moody's: Gas pipeline shortages will hamper Permian producers through 2020
https://www.chron.com/business/energy/article/Moody-s-Gas-pipeline-shortages-will-hamper-13760738.php
April 12, 2019

The lack of natural gas pipelines from the booming Permian Basin will hinder oil producers in the region at least deep into 2020, according to a new report from Moody's Investor Service.

Record-high crude oil production from the Permian also brings with it large surpluses of associated natural gas output that has spiked so high the oil companies are paying to have the gas shipped away at a loss. Companies also are burning, or flaring, more Permian gas into the atmosphere than ever, contributing to methane pollution and climate change.

There's a rush to bring more oil pipelines online to carry the crude to refining and port hubs near Houston and Corpus Christi, but there are fewer natural gas pipeline projects underway. Houston-based Kinder Morgan is leading the two biggest gas pipeline projects, but the lack of gas pipeline capacity will continue at least through most of 2020, Moody's said.

While the U.S. benchmark for natural gas pricing is sitting above $2.50 per million British thermal units, the Permian gas is deeply discounted and has even dipped into record-low negative pricing at times this year.

"Oil pipelines going into service in the second half of 2019 will alleviate the oil bottleneck and spur further oil production — thereby further aggravating the shortfall in natural gas takeaway capacity," the Moody's report said, noting that rising crude volumes carry with them more associated gas production....

[thackney]

Newest push to ease Permian bottlenecks: LNG to power drilling rigs
https://www.worldoil.com/news/2018/8/2/newest-push-to-ease-permian-bottlenecks-lng-to-power-drilling-rigs
 8/2/2018

t’s called micro LNG, and the concept is simple. By super-cooling natural gas, they can pack three times more of it into a truck, which may help the Permian basin deal with its growing gas excess.

Liquefied natural gas is largely shipped in huge ocean-going tankers. Trucking it lets explorers power drilling operations with a fuel that’s abundant, accessible and cheap, saving them as much as 30% in costs versus diesel. An example: As many as five trucks, each carrying about 9,500 gallons of LNG, already trek as much as 400 mi/day in Colorado shale country to make deliveries there.

Next in line may be the Permian in West Texas and New Mexico, where filled-to-capacity pipelines threaten to curtail drilling for both oil and its byproduct, natural gas. Siemens and Baker Hughes are now in talks to build multiple small LNG production plants in U.S. shale centers, seeking to create a new outlet for natural gas at a time when drillers are urging regulators to let them burn it off into the air....

[IsailedawayfromFR]

An added bonus is using LNG for rig fuel produces less emissions than diesel