NGLs have had the pole position on hydrocarbon growth in 2024, due largely to incentives to extract ethane from the egress-constrained Permian Basin. This dynamic will change once Matterhorn Express Pipeline comes online.
East Daley Analytics expects Matterhorn to become operational between September 15 and October 1. Reuters reports Matterhorn has started taking small quantities of natural gas, consistent with pressure-testing performed in the late stages of pipeline construction.
The 2.5 Bcf/d pipeline will allow Permian natural gas and crude production to grow significantly into 4Q24. But ethane is a different story. In the short term, we anticipate less ethane extraction as Matterhorn supports Waha gas prices and narrows the frac spread.
US ethane production hit all-time seasonal highs in March, April and May ’24, powered by growth from the Permian Basin (see figure). This period saw negative Waha gas prices, and EDA at the time predicted a boost to ethane supply due to market volatility.
But incentives are about to change, and will likely end the trend of record ethane output. In the Ethane Supply & Demand Report, East Daley forecasts the record ethane production pace to ease in 2H24.
An early look at EDA’s plant data for the states of Texas and New Mexico indicates ethane production will be down from May to June ’24 by almost 2%. The data set is incomplete, yet the early reporting shows pockets of slightly less ethane recovery at plants owned by EnLink Midstream (ENLC) and Energy Transfer (ET). Delaware sub-basin ethane recovery is flat so far from May to June ’24, based on the available data.
Follow more developments in NGL markets in East Daley’s weekly NGL Insider. – Rob Wilson Tickers: ENLC, ET.
NEW Webinar – Fast and Furious: Production, Constraints and Opportunity
East Daley will host our latest MCAP webinar on September 25th at 10 am MT. In “Fast and Furious: Production, Constraints and Opportunity,” we will look at opportunities across the energy complex:
- Crude: Double H Conversion's impact on crude fundamentals, and who can capture that upside.
- Gas: What the Blackcomb pipeline means for TRGP's G&P growth in the Permian.
- NGLs: The fight for barrels in the Permian, and the implications of OKE's acquisition of ENLC.
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