Executive Summary: Rigs: The total rig count decreased by 5 for the January 5 week, down to 521 from 526. Flows: Last week, a polar vortex brought a powerful Arctic blast and frigid temperatures, leading to significant natural gas production disruptions across several key basins, most notably the Anadarko, Appalachia, Permian, and Rockies. Infrastructure: East Daley forecasts Bakken rich gas to grow at a 2% CAGR from 2024 to ’26, and Hess Midstream (HESM) just took the over on that line.
Rigs:
The total rig count decreased by 5 for the January 5 week, down to 521 from 526. Liquids-driven basins declined by 5 rigs W-o-W.
Flows:
Last week, a polar vortex brought a powerful Arctic blast and frigid temperatures, leading to significant natural gas production disruptions across several key basins, most notably the Anadarko, Appalachia, Permian, and Rockies.
The natural gas pipeline sample declined by 2% W-o-W, dropping from 68.1 Bcf/d to 66.9 Bcf/d. Similar to the winter storm disruptions in early 2024, these production declines, combined with surging demand due to the extreme cold, drove up natural gas prices and placed additional strain on pipeline systems.
With temperatures now returning to seasonal averages for the final week of January, EDA anticipates pipeline samples will recover to levels seen at the end of December. We expect the total US Gas Sample flow to return to a 69.7 Bcf/d average.
*W-o-W change is for the two most recent weeks.
Infrastructure:
East Daley forecasts Bakken rich gas to grow at a 2% CAGR from 2024 to ’26, and Hess Midstream (HESM) just took the over on that line.
HESM reported earnings this week and guided to a CAGR of 10% over the 2024-26 time period. The guidance creates upside to EDA’s supply outlook for the company’s Bakken Tioga and Little Missouri G&P asset system, and potentially for the Bakken in general.
HESM accounts for more than 10% of total processed gas in the basin and guided to inlet volumes of about 460 MMcf/d in ’25, fueled by 4 Hess (HES) rigs.
To handle the growth, HESM expects to spend $300MM in ’25 on 1) gas gathering and compression expansions ($175MM) and 2) a new processing plant north of the Missouri River with nameplate capacity of 125 MMcf/d ($125MM).
Downstream of the plant, Hess Midstream sends most of its NGLs down ONEOK’s (OKE) Elk Creek Pipeline, as shown in East Daley’s new relational tool that highlights the energy pathway a molecule takes from the producer at the wellhead to demand markets. OKE is expanding Elk Creek to 435 Mb/d this quarter.
While the Federal Trade Commission has finalized consent for Chevron’s (CVX) acquisition of Hess, the deal has been held up by an arbitration case initiated by ExxonMobil (XOM) and CNOOC regarding their rights of first refusal to HES’ 30% stake in the Stabroek Block offshore of Guyana. A three-judge arbitration panel is set to review the case in May ’25.
Data Points & Product Release Calendar: