If Mexico Goes MIA, Permian Gas Could Flame Out

25 Oct 2017   Mexico, Shale Gas

Three pipelines connecting the Permian Basin to Mexico came online with total capacity of 3 billion cubic feet per day or bcfd early 2017, but flows have been at a paltry 0.2 bcfd, says Bernstein analyst Jean Ann Salisbury . The firm expected 1.5 bcfd. She thinks that delays in Mexico build-outs “will most negatively impact Permian producers.” Salisbury wrote: We continue to assume that the Mexico demand will come in time to keep shut ins from happening, but do forecast Permian differentials rising above $1/mmbtu by mid 2018, set by the 60c-$1.1/mbtu max interruptible rate to the Midcontinent area, which we think itself could trade up to 40 cents below Henry Hub as the Marcellus pushes westward. This is 40c worse than the Waha forward strip, which we believe is pricing in the best case scenario on Mexico and new pipelines. Best case […]

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