texas permian natural gas flaring forecast to increase as … · 2021. 2. 2. · eliminating the...
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PIPELINESFERC Green Lights Leidy South Natural Gas Expansion
Williams was given the green light by FERC on Friday to move forward with its Leidy South expansion in Pennsylvania, which is designed to carry about 600 MMcf/d of natural gas capacity to Atlantic Seaboard markets.
Williams’ Transcontinental Gas Pipe Line LLC, aka
Transco, brought 125 MMcf/d of Leidy South capacity online in November, with 457 MMcf/d set to be completed this year.
The Leidy South expansion is designed to move Appalachian Basin natural gas supply to the Atlantic Seaboard markets.
PERMIAN BASINTexas Permian Natural Gas Flaring Forecast to Increase as Activity Returns
Natural gas flaring from the Texas portion of the Permian Basin is likely to increase in the coming years but the industry may be able to eliminate most of the routine emissions at little cost, according to a new analysis.
The Rystad Energy analysis, commissioned by the Environmental Defense Fund, found that the flaring is “persistent and likely to increase” as production rebounds. Eliminating the routine flaring, researchers said, could be a cost-effective measure with a nudge by the Railroad Commission of Texas (RRC).
“For example, if Texas were to adopt a 98% gas capture policy, Rystad found that about 84% of
DJ BASINBonanza Creek Puts DUCs on Menu, Awaits Completion of HighPoint Merger
Bonanza Creek Energy Inc. expects to know before the end of March whether shareholders approve of the proposed tie-up with HighPoint Resources Corp., which would merge two big Colorado operators.
Bonanza in November agreed to merge with Denver-Julesburg (DJ) Basin rival HighPoint in a $376 million transaction, combining their Weld County acreage and production.
“We’re planning for a shareholder vote later this quarter, and we continue to make steady progress toward closing the transaction,” Bonanza CEO Eric Greager said.
Pending the merger, Bonanza is concentrating on fin-ishing up some drilled but uncompleted (DUC)
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Tuesday, February 2, 2021 - Vol. 11, No. 83
NGI’s Hub & Flow Podcast Explores Aftermath of Asian LNG Price Rally . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Trade Date: Feb 01; Flow Date(s): Feb 02Basin/Region Range Avg Chg Vol Deals
Gulf CoastBarnett 2.580-2.620 2.595 0.075 16 6Eagle Ford 2.720-2.800 2.755 0.090 530 97Haynesville - E. TX 2.680-2.760 2.695 0.135 1,746 236Haynesville - N. LA 2.685-2.800 2.755 0.140 448 66Permian1 2.580-2.730 2.680 0.150 1,953 310Tuscaloosa Marine Shale 2.820-2.940 2.855 0.175 885 146
MidcontinentArkoma - Woodford 2.690-2.700 2.695 0.125 106 26Cana - Woodford 2.680-2.700 2.690 0.135 164 34Fayetteville 2.685-2.805 2.780 0.160 181 36Granite Wash* 2.630-2.700 2.665 0.110 487 118
NortheastMarcellus - NE PA2 2.540-2.930 2.675 0.255 316 85Marcellus - NE PA: Other3 2.540-2.930 2.700 0.250 246 69Marcellus - NE PA: Tenn4 2.600-2.600 2.600 0.320 70 16Marcellus - SW PA/WV 2.535-2.750 2.660 0.240 2,578 416Utica5 2.580-2.830 2.715 0.340 654 137
Rocky Mountains / WestBakken -- -- -- -- --Green River Basin* 2.600-2.720 2.680 0.035 603 116Niobrara-DJ6 2.640-2.700 2.660 0.090 660 96Piceance Basin* 2.640-2.690 2.660 0.080 298 48Uinta Basin* 2.640-2.640 2.640 0.070 32 4San Juan Basin* 2.660-2.730 2.695 0.105 291 62
Notes: Table represents fixed-price delivered-to pipeline transactions in USD/MMBtu. These data are comprised of deals that NGI believe represent trading activity in the respective resource plays and may contain gas that was produced from conventional formations. * Denotes a tight sands formation. Volumes may not total due to rounding. For more information, please see NGI’s Shale Price Methodology.
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HUB & FLOWNGI’s Hub & Flow Podcast Explores Aftermath of Asian LNG Price Rally
Click here to listen to a new episode of NGI’s Hub & Flow podcast.
Senior Editor Jamison Cocklin, who oversees LNG Insight, takes a look at the historic rally in Asian lique-fied natural gas prices in January and how the rally might
impact the global market this year. Believing that transparent markets empower busi-
nesses, economies and communities, NGI works to pro-vide natural gas price transparency for the Americas. NGI’s Hub & Flow podcast is a part of that effort.
Texas Permian Natural Gas Flaring Forecast to Increase as Activity ReturnsContinued from Page 1
NGI'S 'HUB & FLOW' PODCAST
Latest Episode:After the Storm: How the Asian LNG Rally Could Impact Global Gas Markets in 2021Listen & Subscribe Now
routine flaring volumes and 50% of total flared volumes in the basin could be mitigated without cost.
“Not only is routine flaring the cheapest type of flar-ing for operators to eliminate, it would create significant value for the resource as a whole.”
Exploration and production (E&P) companies could “realize an additional $400 million in wellhead value by 2025 if they were required to capture 98% of the gas they produce.”
Gas capture requirements offer operators “a degree of flexibility while establishing enforceable, concrete targets,” according to the researchers. Updated rules is-sued by the RRC in November require E&Ps working in the Texas oilfields to show why they need permission to flare or vent natural gas.
While flaring and venting gas is limited under the state’s rules, the RRC routinely has allowed exceptions.
“The truth is that the majority of routine flaring comes from a relatively small number of leases,” researchers said.
More than half of the Permian’s
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oil-producing leases had a flaring intensity below 2% from 2015 through 2019. The “top performers” already have achieved 0.4% flaring intensities, but they “are doing so at a competitive disadvantage to laggards that flare at much higher rates,” researchers said.
Flaring volumes last year slumped sharply because of the loss of energy demand related to Covid-19. Production levels are expected to accelerate as demand returns, with flaring and venting forecast to climb.
In its baseline flaring outlook, Rystad estimated that a West Texas Intermediate oil price of $45/bbl and an av-erage Henry Hub natural gas price of $3/MMBtu would lead to about 340 new wells ramping up each month in
the Texas Permian. “This activity level is sufficient for rich gas produc-
tion to increase from a 2019 average of 11.4 Bcf/d to a 2025 average of 13.7 Bcf/d,” researchers noted. “Under a no-policy change assumption, total flaring is forecast to revert to 2019 volumes by 2025,” a yearly average of about 460 MMcf/d.
Flaring intensity declines as a well ages. With last year’s pullback by operators, “the average well age will increase toward 2025,” researchers noted. “This results in a slight decline in flaring intensity, from 4.1% on aver-age in 2019 to 3.4% on average in 2025.”
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Source: Tallgrass Energy LP, NGI calculations. For more info and daily 10am ET updates of this chart, go to natgasintel.com/rextracker.
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Bonanza Creek Puts DUCs on Menu, Awaits Completion of HighPoint MergerContinued from Page 1wells in the DJ. The Denver-based independent expects to complete 25.8 net DUCs through March.
Completion activities began in early January and should continue through the second quarter when the first wells are slated to be turned to sales. Total capex guidance for the first quarter is $35-40 million.
CEO Eric Greager offered insight into fourth quarter performance and a forecast for what’s ahead pending the DJ expansion. Final 4Q2020 and full-year 2020 results are scheduled to be issued on Feb. 17.
“We turned in a strong fourth quarter to successfully finish a challenging year,” Greager said. “This is a cost and margin business,” and the company remained disci-plined during a tumultuous year. “We quickly reacted to the deteriorating conditions in March by halting capital activity, paying off our credit facility, and exiting the year with no debt and $25 million in cash.
“The team’s focus drove unit costs to all-time lows, and despite minimal investment, delivered a
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The Federal Energy Regula-tory Commission said Transco could proceed with installing the Benton Loop, a 3.5-mile section of 42-inch diameter pipeline in Pennsylvania’s Lycoming and Columbia counties (No. CP19-494-000). The Hensel and Hil-ton loops planned by Transco for Clinton County were not included in the approval.
Tulsa-based Williams in November credited “proactive engagement” with stakeholders in achieving early start up for three key North American natu-ral gas and liquids pipeline ex-pansions, including Leidy South, which resulted in earlier-than-expected cash flow in 4Q2020.
Along with Leidy South, Williams late last year also ramped up Southeastern Trail, which serves the Mid-Atlantic and Southeast. The system be-gan partial in-service with 150 MMcf/d in November and an additional 80 MMcf/d in De-cember. The balance of the 296
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FERC Green Lights Leidy South Natural Gas ExpansionContinued from Page 1
stable production profile that exceeded expectations.” Bonanza exited 2020 with no debt and about $25 million in cash.
Average quarterly production began declining in 4Q2020 “and is expected to continue to decline until production from DUCs begin to offset the base decline in 2Q2021.” First quarter production guidance is 22,000-24,000 boe/d, representing an 8% sequential decline.
In 4Q2020, volumes averaged 25,000 boe/d, 54% weighted to oil. For 2020, production averaged nearly 25,200 boe/d, up 8% over 2019. Around $3.2 million was directed to capital expenditures (capex) in 4Q2020, with spending overall last year estimated at $67.7 million.
Lease operating expenses for 4Q2020 were estimated at $2.20/boe, down slightly from the third quarter and 27% lower year/year. Full-year expenses were around $2.38/boe, down 19% from 2019. Rocky Mountain Infrastruc-ture (RMI) effective cost was about $1.01/boe net in the final three months, comprising $1.57/boe of operating expenses, offset by 56 cents/boe of RMI operating rev-enue from working interest partners. For 2020, the RMI effective cost was about $1.03/boe net, with operating expenses of $1.62.
Year-end proved reserves were estimated to be 118.2 million boe, with proved developed producing reserves of 56.4 million boe.
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NGI's Shale Daily™
Tuesday, February 2, 2021
Vol. 11, No. 83
ISSN 2158-8023 (print)
MMcf/d project is expected to come online before the end of March.
The third system to achieve early start up is the Blues tem Pipe l ine , a 120,000 b/d natural gas liquids (NGL) pipeline in the Midcontinent in which Williams partnered with Targa Resources Corp. to link the Conway, KS, and Mont Belvieu, TX, NGL markets.