Denver — The historic freeze-off in Texas and the Midcontinent continued Feb. 17, slashing gas production in the Permian Basin, the Haynesville and the Eagle Ford and pushing Henry Hub cash prices to a record high.
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Despite rising temperatures across the south-central US, total production continued falling Feb. 17, hitting an estimated 72.1 Bcf/d – marking a nearly 18 Bcf/d, or 20%, drop in output over the past week, data from S&P Global Platts Analytics showed.
Declines in the Permian Basin have led the drop in US output as temperatures in Midland, Texas tumbled to 6 degrees Fahrenheit this week. West Texas production was estimated Feb. 17 at just 6.9 Bcf/d, down about 42% over the past week to its lowest level in over three years.
A major freeze-off in the Haynesville, where production has fallen by over 4 Bcf/d since the weekend, is also largely to blame for the precipitous contraction in US supply. On Feb. 17, output from the Louisiana-Texas shale play was estimated at 8.2 Bcf/d – also its lowest in three years.
Smaller declines have been registered in the Eagle Ford and Oklahoma's SCOOP/STACK basins, where output has fallen by about 800 MMcf/d and 500 MMcf/d, respectively, Platts Analytics data showed.
As gas prices at several locations across the Midcontinent and East Texas pulled back from record highs in Feb. 17 trading, Henry Hub gas surged to a record high as supply tightness begins spreading to the broader US gas market.
At the benchmark US trading location, cash prices finished trading up $6.65 on the day to a record-high $23.61/MMBtu, preliminary settlement data from S&P Global Platts showed.
In Oklahoma, Kansas and eastern Arkansas, prices at Enable Gas East and ONEOK, Okla. also saw upward momentum, rising to fresh highs at over $434/MMBtu and $1,192/MMBtu, respectively. At other locations, including NGPL Midcontinent, Southern Star and Panhandle, Tx.-Okla, prices fell sharply into the $20s/MMBtu, down from recent record levels ranging from $225 to over $620/MMBtu.
In East Texas, trading at many hubs was suspended Feb. 17 – presumably amid low spot supply. Prices at Katy Hub in Houston eased only modestly to around $216/MMBtu, down from $359 just one day prior.
Supply & demand
With record cold temperatures across the central-south US beginning to rise, there were some indications on Feb. 17 that demand was easing. Total residential-commercial consumption was down about 7 Bcf from its recent high, estimated at 62.9 Bcf/d. US power burn demand was off about 6 Bcf from its own Feb. 15 high to 33.3 Bcf/d, Platts Analytics data showed.
The modest easing in demand allowed LNG feedgas deliveries to rise on the day, hitting 6.3 Bcf/d – up from just 2.2 Bcf/d on Feb. 16. Pipeline exports to Mexico also climbed about 1 Bcf or 25% on the day to 5 Bcf/d Feb. 17, while pipeline imports from Canada remained near a three-year high at 7.7 Bcf/d.
Over the next week, the US population-weighted temperature is forecast to rise steadily into the mid-40s Fahrenheit, up from current levels below freezing. Over the same timeframe, Platts Analytics data shows total US gas demand, including exports, falling to 109 Bcf/d, down from the current 137 Bcf/d level.