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Yahoo
09-07-2025
- Business
- Yahoo
Negative Prices, Rising Flaring Signal Pipeline Gridlock in Permian
Previously, we reported that natural gas at the Waha hub was selling for near-zero or sub-zero prices for much of 2024 thanks in large part to excess natural gas production in the Permian Basin coupled with limited takeaway capacity due to a shortage of gas pipelines. Indeed, prices at the hub spent half the year in negative territory, sinking to all-time low -$7/mmbtu at the end of August. This has become a recurrent challenge in recent years ever since the Permian Shale boom led to a surge in associated gas production. Consequently, Permian gas infrastructure became saturated, sometimes forcing producers to pay for someone to take their gas so that they can focus on something more valuable: crude oil. Unfortunately, the Permian continues to struggle with a deluge of gas in the current year, despite the startup of the pivotal Matterhorn Express in 2024. And now the Permian Basin has to contend with a major environmental hazard: gas flaring. June 2025 saw the third consecutive monthly uptick in natural gas flaring across the basin as production continues to outpace existing pipeline takeaway capacity. While the mid-2024 startup of the Matterhorn Express pipeline provided short-term relief, regional growth now signals renewed year, Maria Paz Urdaneta, commodities analyst with East Daley Analytics, predicted that Matterhorn Express' start-up would redirect Permian natural gas to South Texas and, for a brief window, shift market leverage from pipelines to shippers. The Matterhorn would also relieve pressure on Permian gas prices caused by the takeaway bottleneck. However, the analyst warned that the relief could be short-lived: Urdaneta predicted that Permian Basin producers are likely to increase production once Matterhorn enters service, triggering more takeaway constraints that could send natural gas prices back into negative territory by the second half of 2026. In reality, this scenario appears to be unfolding earlier than expected, with negative pricing already recorded throughout much of 2025. Even with the Matterhorn pipeline, production growth in the Permian continues to challenge existing infrastructure, leading to price volatility and, at times, negative gas prices. According to East Daley Analytics' latest model, current Permian gas production is well above total effective egress capacity, leading to the flaring of nearly 500 million cubic feet of gas per day, equivalent to the emissions profile of 2.2 million cars if extended over the course of one year. Natural gas flaring in the United States is heavily regulated and significantly reduced in many areas. While routine flaring is prohibited in some states and on federal lands, exceptions and variances are often granted for safety, operational needs, or emergencies. The U.S. has also committed to the global initiative of ending routine flaring by 2030. According to the International Energy Agency (IEA)..''Flaring results in the release of substantial volumes of potent GHGs, including methane, black soot and nitrous oxide. Venting causes even worse environmental damage than flaring.'' The IEA estimates that ~140 billion cubic meters of natural gas is flared globally each year, making the practice a major source of CO2 emissions, methane and black soot. In 2022, flaring resulted in 500 Mt CO2 equivalent annual GHG emissions. The IEA says that the elimination of all non-emergency flaring by 2030 would cut global CO2 emissions by 365 Mt per year. Meanwhile, upcoming projects like the Palo Duro?Oklahoma pipeline and the Blackcomb will take time to take effect while pipeline operators such as Kinder Morgan (NYSE:KMI) and Targa Resources (NYSE:TRGP) are racing against rising environmental scrutiny and Texas Railroad Commission leniency on flaring permits. Last month, Midstream II LLC launched a binding open season as it looks to gauge shipper demand for its proposed 275-mile Palo Duro (PD) natural gas pipeline that will link residue markets at Waha with Mid-Continent outlets in the Anadarko Basin. The project intends to repurpose the existing 16-inch pipe on the company's gathering header into western Oklahoma that runs from Nolan County to Wheeler County, Texas. Midstream aims to seek fast-tracked interstate authority from the Federal Energy Regulatory Commission since no new pipeline will be constructed, with the company targeting Q1 2026 for the pipeline to commence operations. 'This Open Season marks a key milestone for the Palo Duro Pipeline and underscores our commitment to delivering scalable, market-responsive infrastructure,' said Matt Flory, Producers Midstream's chief executive officer. 'The pipeline's unique interconnectivity and strategic positioning creates a much-needed additional outlet for constrained Permian gas, while also supporting the rapid growth of AI-driven power solutions and other emerging sources of demand.' On the other hand, a WhiteWater-backed investor group has already reached a final investment decision (FID) on the Blackcomb Pipeline. The 42-inch gas line will transport up to 2.5 Bcf/d of gas over ~365 miles from the Permian when it comes online in 2H26. By Alex Kimani for More Top Reads From this article on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Mint
24-04-2025
- Business
- Mint
Trade War Is Diverting US Petroleum Gas Cargoes Away From China
Multiple carriers of petroleum-based gases traveling from the US to China have begun diverting to other countries due to the intensifying trade war between the world's two largest economies. Four cargoes of propane have shifted their routes from China to alternate destinations over the past week, bound for countries including Japan and South Korea, according to a report from analytics firm Vortexa. At least one cargo of ethane — which is used in plastics production — has been scrapped entirely, according to a person familiar with the matter. The diversions show the disruption to supply chains caused by the trade fight between the US and China, historically a major buyer of US ethane and petroleum gases. President Donald Trump has levied 145% tariffs on most US imports from China, and the US Trade Representative more recently imposed steep fees on Chinese-linked vessels seeking to access American ports. Eight Very Large Gas Carriers carrying US LPG were still on course for China as of this week, while the four diversions have all been recorded since April 17, according to Vortexa. Diverted vessels include the Zakher, Maple Gas, BW Gemini and Eiger Explorer, all departing from the US Gulf Coast. The G. Arete, a propane carrier, diverted to South Korea from China, while a chemical tanker named STI Notting Hill is also rerouting to South Korea, Vortexa said. The US exported about 310,000 barrels of propane to China per day in 2024, double the volume from a year earlier, according to East Daley Analytics. Spot ethane shipments may continue to be affected by the trade war, while committed cargoes are harder to unwind, the person said. Asia-bound flows of ethylene — used in plastics and industrial solvents — have already slowed because of seasonal factors but may be further reduced by the tariffs, the person said. With assistance from Nathan Risser and Robert Tuttle. This article was generated from an automated news agency feed without modifications to text. First Published: 25 Apr 2025, 03:36 AM IST
The Hindu
22-04-2025
- Business
- The Hindu
Sino-U.S. trade war redrawing global LPG trading, outlook
The global liquefied petroleum gas (LPG) market is facing an upheaval as high tariffs on U.S. imports force Chinese buyers to swap American cargoes for alternatives from the Middle East, while U.S. shipments divert to Europe and elsewhere in Asia. The shakeup is expected to depress the shale gas byproducts' prices and demand, hurt the bottom lines of U.S. shale producers and Chinese petrochemical companies, and boost the appetite for alternatives such as naphtha. It is also expected to benefit Middle East suppliers, who are being tapped by the Chinese importers as replacements, and opportunistic LPG buyers in Asia in markets such as Japan and India, who are taking advantage of the product's price declines. Natural gas liquids (NGLs) - propane, ethane and butane - are the latest energy products ensnared in the escalating trade war between the world's two largest economies. China has already halted U.S. crude and liquefied natural gas (LNG) imports. Chinese petrochemical firms reliant on abundant U.S. LPG and ethane supply as feedstock have become the lowest cost producers globally. U.S. oil and gas producers need China to buy their NGLs as domestic supply exceeds demand, and swelling inventories of these products could hurt the economics for shale drillers already facing acute challenges to growth. While U.S. exporters were able to re-route LPG cargoes away from China at the time of trade frictions during U.S. President Donald Trump's first term, the doubling of trade volumes since then makes it difficult for either country to replace the other, said Julian Renton, an NGL analyst at midstream analytics firm East Daley Analytics. "There's a certain amount of flows that could be redirected, but you can't shift 400 kbd to any other market that could take it," he said. China is the second-largest U.S. LPG buyer after Japan, Energy Information Administration data showed. East Daley expects U.S. exports to China could fall by about 200,000 barrels per day (bpd) over six to nine months, leading to higher domestic inventories and depressed prices. Energy Aspects analyst Cheryl Liu expects other LPG importers such as India, Indonesia, Japan and South Korea to buy more of the cheaper U.S. product, while the Middle East ramps up supply to China. "Winners should be all other buyers and Middle East exporters. Losers, I would say, both China and the U.S.," she said. A source at a major Japanese LPG company said unlike Middle East supplies, it is easy to swap U.S. LPG with supply from other countries as U.S. cargoes are not tied to specific destinations. "This will likely accelerate the swapping of U.S. LPG contracts held by the Chinese companies with Middle Eastern, Canadian, and Australian LPG contracts held by Japan, South Korea, Southeast Asian countries and India," he said. "The Chinese will need to offer some incentive to those willing to swap." An Asian LPG trader said Japanese buyers grabbed cheap U.S. imports for end-April and May arrival, with demand mostly from utilities as they restock supply. Japan's U.S. LPG imports are up 12% to 15% on-month so far in April to 274,000-276,000 bpd, provisional data from ship-tracker OilX, and LSEG showed. Data from ship-tracker Kpler showed such imports nearly doubled to 639,000 bpd in April. Indian refiners have asked Middle East suppliers to swap long-term supply with U.S. LPG at discounts to Saudi Contract Price (CP), people familiar with their purchase plans said. China's imports Last year, China bought a record 17.3 million tons, or 550,000 bpd, of U.S. propane, 60% of its total imports of the gas liquid, Chinese customs data showed. Chinese buyers are scrambling still to swap U.S. LPG cargoes for supply from other countries to avoid tariffs, traders said. The tariffs come into effect on May 14. While the costs of such swaps were more than $100 per ton for cargoes arriving in the first half of May, Chinese importers have been less inclined to fork out anything above $50 per ton for second-half May supplies, though some sellers are still demanding around $100 per ton for such swaps, the Asian LPG trader said. Meanwhile, the trade war has bolstered premiums of Middle East LPG arriving in China in May to first-half June to $30-$60 a ton against the benchmark contract price, versus pre-trade-war levels of $20-$30, the trader and two Chinese LPG trading executives said. The sources declined to be named as they are not authorised to speak to media. The tariffs on imports from the U.S. are expected to reduce China's LPG demand by 150,000 bpd in the second half of 2025 from the same period a year ago, while increasing naphtha consumption by 140,000 bpd, according to Energy Aspects. However, these will not fully replace the 1.5 million tons monthly U.S. supply, Celia Chen, lead LPG analyst at oil pricing firm Argus told an online seminar, expecting a drop of 1 million tons per month of supply for China. For ethane, a China-based trade source said ethane-based crackers are maintaining their output as of now as their stocks can last until the second-half of May, but major importers have sought import duty waivers from Beijing given that the U.S. is the sole supplier to China. Satellite Chemical told its investors on April 8 it was seeking a waiver of ethane import tariffs, the company disclosed in a filing to the stock exchange.
Yahoo
21-04-2025
- Business
- Yahoo
Sino-US trade war redrawing global LPG trading, outlook
By Trixie Yap, Siyi Liu and Shariq Khan SINGAPORE/NEW YORK (Reuters) -The global liquefied petroleum gas (LPG) market is facing an upheaval as high tariffs on U.S. imports force Chinese buyers to swap American cargoes for alternatives from the Middle East, while U.S. shipments divert to Europe and elsewhere in Asia. The shakeup is expected to depress the shale gas byproducts' prices and demand, hurt the bottom lines of U.S. shale producers and Chinese petrochemical companies, and boost the appetite for alternatives such as naphtha. It is also expected to benefit Middle East suppliers, who are being tapped by the Chinese importers as replacements, and opportunistic LPG buyers in Asia in markets such as Japan and India, who are taking advantage of the product's price declines. Natural gas liquids (NGLs) - propane, ethane and butane - are the latest energy products ensnared in the escalating trade war between the world's two largest economies. China has already halted U.S. crude and liquefied natural gas (LNG) imports. Chinese petrochemical firms reliant on abundant U.S. LPG and ethane supply as feedstock have become the lowest cost producers globally. U.S. oil and gas producers need China to buy their NGLs as domestic supply exceeds demand, and swelling inventories of these products could hurt the economics for shale drillers already facing acute challenges to growth. While U.S. exporters were able to re-route LPG cargoes away from China at the time of trade frictions during U.S. President Donald Trump's first term, the doubling of trade volumes since then makes it difficult for either country to replace the other, said Julian Renton, an NGL analyst at midstream analytics firm East Daley Analytics. "There's a certain amount of flows that could be redirected, but you can't shift 400 kbd to any other market that could take it," he said. China is the second-largest U.S. LPG buyer after Japan, Energy Information Administration data showed. East Daley expects U.S. exports to China could fall by about 200,000 barrels per day (bpd) over six to nine months, leading to higher domestic inventories and depressed prices. Energy Aspects analyst Cheryl Liu expects other LPG importers such as India, Indonesia, Japan and South Korea to buy more of the cheaper U.S. product, while the Middle East ramps up supply to China. "Winners should be all other buyers and Middle East exporters. Losers, I would say, both China and the U.S.," she said. A source at a major Japanese LPG company said unlike Middle East supplies, it is easy to swap U.S. LPG with supply from other countries as U.S. cargoes are not tied to specific destinations. "This will likely accelerate the swapping of U.S. LPG contracts held by the Chinese companies with Middle Eastern, Canadian, and Australian LPG contracts held by Japan, South Korea, Southeast Asian countries and India," he said. "The Chinese will need to offer some incentive to those willing to swap." An Asian LPG trader said Japanese buyers grabbed cheap U.S. imports for end-April and May arrival, with demand mostly from utilities as they restock supply. Japan's U.S. LPG imports are up 12% to 15% on-month so far in April to 274,000-276,000 bpd, provisional data from ship-tracker OilX, and LSEG showed. Data from ship-tracker Kpler showed such imports nearly doubled to 639,000 bpd in April. Indian refiners have asked Middle East suppliers to swap long-term supply with U.S. LPG at discounts to Saudi Contract Price (CP), people familiar with their purchase plans said. CHINA'S IMPORTS Last year, China bought a record 17.3 million tons, or 550,000 bpd, of U.S. propane, 60% of its total imports of the gas liquid, Chinese customs data showed. Chinese buyers are scrambling still to swap U.S. LPG cargoes for supply from other countries to avoid tariffs, traders said. The tariffs come into effect on May 14. While the costs of such swaps were more than $100 per ton for cargoes arriving in the first half of May, Chinese importers have been less inclined to fork out anything above $50 per ton for second-half May supplies, though some sellers are still demanding around $100 per ton for such swaps, the Asian LPG trader said. Meanwhile, the trade war has bolstered premiums of Middle East LPG arriving in China in May to first-half June to $30-$60 a ton against the benchmark contract price, versus pre-trade-war levels of $20-$30, the trader and two Chinese LPG trading executives said. The sources declined to be named as they are not authorised to speak to media. The tariffs on imports from the U.S. are expected to reduce China's LPG demand by 150,000 bpd in the second half of 2025 from the same period a year ago, while increasing naphtha consumption by 140,000 bpd, according to Energy Aspects. However, these will not fully replace the 1.5 million tons monthly U.S. supply, Celia Chen, lead LPG analyst at oil pricing firm Argus told an online seminar, expecting a drop of 1 million tons per month of supply for China. For ethane, a China-based trade source said ethane-based crackers are maintaining their output as of now as their stocks can last until the second-half of May, but major importers have sought import duty waivers from Beijing given that the U.S. is the sole supplier to China. Satellite Chemical told its investors on April 8 it was seeking a waiver of ethane import tariffs, the company disclosed in a filing to the stock exchange.
Reuters
21-04-2025
- Business
- Reuters
Sino-US trade war redrawing global LPG trading, outlook
SINGAPORE/NEW YORK, April 21 (Reuters) - The global liquefied petroleum gas (LPG) market is facing an upheaval as high tariffs on U.S. imports force Chinese buyers to swap American cargoes for alternatives from the Middle East, while U.S. shipments divert to Europe and elsewhere in Asia. The shakeup is expected to depress the shale gas byproducts' prices and demand, hurt the bottom lines of U.S. shale producers and Chinese petrochemical companies, and boost the appetite for alternatives such as naphtha. It is also expected to benefit Middle East suppliers, who are being tapped by the Chinese importers as replacements, and opportunistic LPG buyers in Asia in markets such as Japan and India, who are taking advantage of the product's price declines. Natural gas liquids (NGLs) - propane, ethane and butane - are the latest energy products ensnared in the escalating trade war between the world's two largest economies. China has already halted U.S. crude and liquefied natural gas (LNG) imports. Chinese petrochemical firms reliant on abundant U.S. LPG and ethane supply as feedstock have become the lowest cost producers globally. U.S. oil and gas producers need China to buy their NGLs as domestic supply exceeds demand, and swelling inventories of these products could hurt the economics for shale drillers already facing acute challenges to growth. While U.S. exporters were able to re-route LPG cargoes away from China at the time of trade frictions during U.S. President Donald Trump's first term, the doubling of trade volumes since then makes it difficult for either country to replace the other, said Julian Renton, an NGL analyst at midstream analytics firm East Daley Analytics. "There's a certain amount of flows that could be redirected, but you can't shift 400 kbd to any other market that could take it," he said. China is the second-largest U.S. LPG buyer after Japan, Energy Information Administration data showed. East Daley expects U.S. exports to China could fall by about 200,000 barrels per day (bpd) over six to nine months, leading to higher domestic inventories and depressed prices. Energy Aspects analyst Cheryl Liu expects other LPG importers such as India, Indonesia, Japan and South Korea to buy more of the cheaper U.S. product, while the Middle East ramps up supply to China. "Winners should be all other buyers and Middle East exporters. Losers, I would say, both China and the U.S.," she said. A source at a major Japanese LPG company said unlike Middle East supplies, it is easy to swap U.S. LPG with supply from other countries as U.S. cargoes are not tied to specific destinations. "This will likely accelerate the swapping of U.S. LPG contracts held by the Chinese companies with Middle Eastern, Canadian, and Australian LPG contracts held by Japan, South Korea, Southeast Asian countries and India," he said. "The Chinese will need to offer some incentive to those willing to swap." An Asian LPG trader said Japanese buyers grabbed cheap U.S. imports for end-April and May arrival, with demand mostly from utilities as they restock supply. Japan's U.S. LPG imports are up 12% to 15% on-month so far in April to 274,000-276,000 bpd, provisional data from ship-tracker OilX, and LSEG showed. Data from ship-tracker Kpler showed such imports nearly doubled to 639,000 bpd in April. Indian refiners have asked Middle East suppliers to swap long-term supply with U.S. LPG at discounts to Saudi Contract Price (CP), people familiar with their purchase plans said. Last year, China bought a record 17.3 million tons, or 550,000 bpd, of U.S. propane, 60% of its total imports of the gas liquid, Chinese customs data showed. Chinese buyers are scrambling still to swap U.S. LPG cargoes for supply from other countries to avoid tariffs, traders said. The tariffs come into effect on May 14. While the costs of such swaps were more than $100 per ton for cargoes arriving in the first half of May, Chinese importers have been less inclined to fork out anything above $50 per ton for second-half May supplies, though some sellers are still demanding around $100 per ton for such swaps, the Asian LPG trader said. Meanwhile, the trade war has bolstered premiums of Middle East LPG arriving in China in May to first-half June to $30-$60 a ton against the benchmark contract price, versus pre-trade-war levels of $20-$30, the trader and two Chinese LPG trading executives said. The sources declined to be named as they are not authorised to speak to media. The tariffs on imports from the U.S. are expected to reduce China's LPG demand by 150,000 bpd in the second half of 2025 from the same period a year ago, while increasing naphtha consumption by 140,000 bpd, according to Energy Aspects. However, these will not fully replace the 1.5 million tons monthly U.S. supply, Celia Chen, lead LPG analyst at oil pricing firm Argus told an online seminar, expecting a drop of 1 million tons per month of supply for China. For ethane, a China-based trade source said ethane-based crackers are maintaining their output as of now as their stocks can last until the second-half of May, but major importers have sought import duty waivers from Beijing given that the U.S. is the sole supplier to China. Satellite Chemical ( opens new tab told its investors on April 8 it was seeking a waiver of ethane import tariffs, the company disclosed in a filing to the stock exchange.
