Permian Associated Gas is Damaging the US Markets

By | February 28, 2023

Half the USA rigs running today are running in the Permian basin. The Permian cannot do it all. Further, the rigs are seeking oil yet the Delaware and other parts of the Permian play are gas basins, not oil. The use of fracking and horizontal drilling is getting some oil, but these wells can quickly degenerate into mostly gas wells. As a result all this “associated” gas is glutting the market. The result is a crush of gas onto a market that has more traditional gas sources supplying it.

Basically the Permian glut of gas has destroyed the Barnett and Fayetteville plays which are predominately gas plays. Even the Haynesville play is seeing the operators pulling back. And western Oklahoma gas prices are often no more than $1.50/MCF. With the Marcellus and Appalachian plays providing all the gas needed to the east, there is simply no place for Permian gas to go and flaring that gas is not only wasteful on the face of it, but reduces the formation pressures which likely results in a reduction of the recoverable reserves of the mineral owner.

This is a consequence of bad policy that has stifled drilling on federal lands. Drillers are going where they can drill. There is no use wasting their resources in court to free up federal lands.