Article worth looking at

https://www.spglobal.com/platts/en/market-insights/latest-news/natural-gas/041221-flaring-reductions-rising-gors-support-2021-rebound-in-us-gas-production

The opening statement says it all, with the words “unexpected volume growth from the associated gas basins.” This means expect oil output to rise, and gas output to rise with it.

Oil and natgas prices are up this morning. I may choose to reduce UNL by another 10 shares if prices move much higher. Production is going to grow. I’m not even close to “in the know” about pipelines… Last I heard, there was at least one pipeline that was going to open up regional pricing to carry away more gas from the Permian basin. This would fall in line with what the article I’ve shared now is saying. Permian is flaring less, meaning more gas is being put into the pipeline. This could be due to the lack of wells that have been completed over the last year. Which could lead to lower production numbers, and more gas that was being flared is now being put into a pipeline. It also could be due to more pipeline capacity, which I do know of one, if need to look it up I can.

Gotta remember that regional prices, such as Waha, were lower than Henry Hub for quite some time, causing more gas to be flared. They simply didn’t have the capacity to carry it away; now they have more capacity, price may not even be a factor… If oil is high enough, the gas will simply go into the pipeline because no one wants to see it wasted regardless. Also there may be incentives from the federal government to get it sent down stream vs flare it. Production is going to rise, keeping NYMEX prices below $3.

I personally think $2.75/mmbtu is the new $3. Good Luck

Oldinvestor

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