Executive Summary:
Infrastructure: Producers Midstream II held an open season from June 30-July 14 for its Palo Duro Pipeline project to move gas from the Permian Basin to Midcontinent markets.
Rigs: The US rig count increased by 4 for the July 5 week, standing at 522.
Flows: US natural gas volumes averaged 79.8 Bcf/d in pipeline samples for the week ending July 13, down 0.2% W-o-W.
Storage: Traders expect the EIA to report a 48 Bcf injection for the week ending July 10.
Infrastructure:
Producers Midstream II held a binding open season from June 30-July 14 for its Palo Duro Pipeline project to move natural gas from the Permian Basin to Midcontinent markets. The project would convert an existing 275 mile, 16-inch intrastate pipeline from Nolan County to Wheeler County, TX, into an interstate line regulated by the Federal Energy Regulatory Commission.
The Tailwater-backed company is seeking firm transportation commitments of at least 10 years and plans a project in-service in 1Q26. Producers is targeting emerging demand for data centers, petrochemicals, power generation and industrial use.
Gas will flow northbound from the Permian and provide better access to downstream demand. In Wheeler County, the line ties into Producers Midstream’s residue header system, which extends from the Texas Panhandle into western Oklahoma and interconnects with interstate pipelines including Northern Natural Gas, Southern Star, ANR, NGPL, Panhandle Eastern, Enable Gas Transmission, and Transwestern, as well as intrastate systems such as EOIT and OWT.
No new construction is planned. The company intends to use existing infrastructure and lease capacity on the header system to create interstate service connecting the Waha hub to the Anadarko Basin. The pipeline will operate at a design capacity of 80 MMcf/d, supported by one compressor station and up to 12 meter stations. If fully dedicated to data centers, that volume could support ~125–150 MW of total load.
Gas pipeline takeaway is a chronic concern for Permian producers. While Palo Duro Pipeline is already operational, the project could expand demand for gas at Waha to better use existing capacity.
Rigs:
The US rig count increased by 4 for the July 5 week, standing at 522. The ArkLaTex (+1), Bakken (+1) and Barnett (+1) each gained 1 rig while the DJ and Permian both lost a rig. Other basins remained flat W-o-W.
On the midstream side, Targa Resources (TRGP) is up 3 rigs net on its Permian systems. Energy Transfer (ET) is down 5 rigs total with losses on its Anadarko and Permian systems.
See East Daley’s weekly Rig Activity Tracker for more information on rigs by basin and company.
Flows:
US natural gas volumes averaged 69.8 Bcf/d in pipeline samples for the week ending July 13, down 1.0.% W-o-W from 70.5 Bcf/d the previous week.
Gas basins declined 0.7% W-o-W to average 43.9 Bcf/d. The Haynesville sample declined 2.2% to 10.9 Bcf/d. The Marcellus+Utica declined 0.2% to 32.1 Bcf/d. The Anadarko sample rose 1.8 to 4.2 Bcf/d.
Storage:
Traders and analysts expect the Energy Information Administration (EIA) to report a 48 Bcf injection for the week ending July 10. A 48 Bcf injection would increase the surplus to the five-year average by 7 Bcf to 180 Bcf. The storage deficit to last year would decrease by 30 Bcf to 154 Bcf.
Cash and prompt prices have separated some this week with the August 2025 Henry Hub contract gaining about $0.30/MMBtu (+9.0%) in trading from Friday to Tuesday (July 11-15). Cash has held steady around $3.15.
The market is looking at both weather and production in the short term. Production has been relatively flat at 106.0 Bcf/d after a run-up during the last two weeks of June and the first two weeks of July. Weather forecasts for the next 10-15 days predict above-normal cooling degree days and point to much hotter weather at the end of the month. If these forecasts hold, the August contract could trade at higher levels through the end of July. On Tuesday (July 15), prompt broke above $3.50 for the first time since July 3.
Calendar:
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