Waha Natural Gas Price ... at Increasing Discount to Hen

Waha Natural Gas Price ... at Increasing Discount to Hen

Postby cmm3rd » Wed Sep 21, 2022 11:10 am

Which of the companies being followed here are most affected by the very high discount at the Waha Hub? Should we be focusing more (until it resolves) on companies who are selling their gas at HH?

Waha Natural Gas Price Trading at Increasing Discount to Henry Hub, Bolstering Mexico
By Christopher Lenton
September 20, 2022
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Natural gas prices at the Waha pricing point in West Texas continue to offer an attractive long term option for offtakers, including in Mexico, according to analysis from the U.S. Energy Information Administration (EIA).
Mexico

Since late 2021, the difference “has been widening” between the natural gas price at Waha and the Henry Hub benchmark in Louisiana, researchers said.

The price of natural gas traded at Waha averaged $1.43/MMBtu less than the Henry Hub price during the first half of September. In comparison, in the first half of September 2021, natural gas at the Waha Hub traded at an average of 24 cents/MMBtu less than the Henry Hub price.

EIA analysts said recent pipeline maintenance in the Permian Basin area has contributed to a wider price difference. Booming oil and gas production has also subdued prices in West Texas.

The Permian Basin, which feeds the Waha trading hub, is the second largest gas producing region in the United States after Appalachia and is growing. East Daily Capital is forecasting 4.6 Bcf/d of U.S. gas supply growth by the end of 2023, led by associated gas out of the Permian Basin.

Natural gas production in the Permian Basin more than doubled in the past five years and reached a high of 16.7 Bcf/d in 2021, according to the EIA. Once strained by infrastructure deficits, since April 2022, additional pipeline projects out of the Permian Basin have been announced that would expand pipeline takeaway capacity by approximately 4.2 Bcf/d by the end of 2024.
‘Brutally Attractive’

Mexico’s access to the Waha natural gas hub has been bolstered thanks to new infrastructure. This includes Grupo Carso’s 472 MMcf/d Samalayuca-Sásabe pipeline and Fermaca’s Waha-to-Guadalajara, aka Wahalajara, system. Wahalajara allows molecules from the Permian Basin to reach Guadalajara, Mexico’s’ second-most populous city and a major industrial center.

West Texas flows into Mexico were 700 MMcf/d on Tuesday, according to NGI calculations. Overall West Texas imports in Mexico rose by 12% during the first five months of the year versus the same span in 2021, according to EIA research.

In May, West Texas exports into Mexico averaged a record high of 1.6 Bcf/d, researchers said previously.

Energy expert Rosanety Barrios tweeted that Waha prices were “brutally attractive” for Mexico. While the difference is less pronounced, Waha also trades at a discount to Houston Ship Channel, a major pricing point in Mexico.

She said Mexico “is the only country in the world that has two pipelines coming out of Waha, and that’s not by accident, but the result of careful planning and profound market knowledge.”

She warned however that state utility Comisión Federal de Electricidad (CFE), the anchor shipper on the nation’s private pipelines, needed to properly manage capacity on the pipelines in order for the opportunity to be seized.
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Re: Waha Natural Gas Price ... at Increasing Discount to Hen

Postby Fraser921 » Wed Sep 21, 2022 11:55 am

Anyone in west Texas , Permian basin, that's a gasser
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Re: Waha Natural Gas Price ... at Increasing Discount to Hen

Postby dan_s » Wed Sep 21, 2022 1:43 pm

None of the five gassers in our Sweet 16 (AR, CRK, EQT, RRC and SBOW) are in the Permian Basin. All of our Permian Basin companies get the majority of their revenues from oil sales.

The upstream companies in our High Yield Income Portfolio (CTRA, DVN, FANG and PXD) do have some exposure, however they are getting much higher realized ngas prices than they did a year ago.
Dan Steffens
Energy Prospectus Group
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