Why Natural Gas is a Bottleneck for Permian Producers

By | October 29, 2022

To show that drilling is concentrated in W. Texas, the graphic below shows where and how many rigs are running today. The “Permian” Basin shows to have more than half of all rigs today. Texas has 2/3rd of all rigs and they are producing mostly horizontal “unconventional” “liquids rich” oils – in other words, the oil is light and is mostly natural gas with ethane, propane, butanes and some of the heavier oils that they want. That’s why there is more gas than there is gas pipelines to carry the NG away from Texas and to markets that need the gas.

Another notable feature is NY and Maryland are part of the Appalachian Basin but fracking is banned in both states. Only a vertical well can be drilled and frankly, very very little of that is happening. The drilling is in W VA, Ohio, and PA. And, Boston, for instance is desperate for a pipeline through NY but NY won’t allow it. A pipeline from the Marcellus of PA to Boston would make natural gas cheaper in Boston. Boston imported Liquid Natural Gas from Russia – no more. So they are paying a premium for LNG in competition with Europe when there is plenty of natural gas if NY would simply allow the pipelines to cross the rivers – the only part of the pipeline planned that the state can stop. The Feds approved the project years ago.

Graphic from https://www.tcicapital.com/tci-insights/active-drilling-rigs/