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| Thu, 30th Jul 2020 17:55:00 |
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The Permian Could See Record Gas Production In 2021 |
The pandemic has curtailed associated gas production in the Permian basin, temporarily relieving some gas flaring, but the basin could return to record gas production levels by the end of 2021. By 2023, the rate of gas flaring could increase substantially.
Starting next year, drilling activity begins to resume in the Permian, assuming WTI stays above $45 per barrel, according to Rystad Energy. The increase in drilling leads to more associated gas output. The pandemic has knocked gas production down, but by late 2021, Permian gas production will be back to pre-pandemic levels – and it will continue to rise from there.
Rystad expects gas output to continue to rise, reaching 16 billion cubic feet per day (bcf/d) by 2023, which, to be sure, is 2 bcf/d below the firm’s prior forecast from earlier this year.
But the market downturn has also delayed investments in new pipelines, Rystad says, such as the Pecos Trail and Permian to Katy pipelines. The firm also said it was unlikely that Tellurian’s Driftwood LNG and its accompanying gas pipeline will move forward in the short-term.
Taken together, Rystad says that absent new pipelines, there could be another surge in gas flaring. “[W]e conclude that in a $45-$50 WTI world, there will be a need for new gas takeaway projects from the Permian as early as 2023-2024,” Rystad Energy’s Head of Shale Research, Artem Abramov, said in a statement. “If these projects are not approved early enough, the basin might end up with another period of degradation in local differentials and potentially increased gas flaring.” Rystad added that it is “highly possible” that new pipelines would be approved “too late.”
Read original full article
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