India to raise natural gas share in energy mix
The government on Monday announced that it has set a target to raise the share of natural gas in the energy mix to 15% by 2030, from current 6.3%. Rameswar Teli, Minister of State for Petroleum and Natural Gas, in a written reply in Rajya Sabha said the government is taking various initiatives including expansion of national gas grid to about 33,500 km from current 21,715 km, expansion of city gas distribution (CGD) network, setting up of liquefied natural gas terminals. It is also planning to allocate domestic gas to compressed natural gas (transport) /piped natural gas (domestic) in no cut category and allow marketing and pricing freedom to gas produced from high pressure/high temperature areas, deep water & ultra-deep water and from coal seams. “Providing piped natural gas (PNG) connections and establishment of compressed natural gas (CNG) stations is part of the development of CGD network and the same is carried out by the entities authorized by Petroleum and Natural Gas Regulatory Board (PNGRB),” said the minister in parliament.
Energy Market Madness Leads To Record-Breaking Coal Consumption
Global coal-fired electricity generators are producing more power than ever before in response to booming electricity demand after the pandemic and the surging price of gas following Russia’s invasion of Ukraine. The world’s coal-fired generators produced a record 10,244 terawatt-hours (TWh) in 2021 surpassing the previous record of 10,098 TWh set in 2018 (“Statistical review of world energy”, BP, July 2022). Coal-fuelled generation is on course to set an even higher record in 2022 as generators in Europe and Asia minimise the use of expensive gas following Russia’s invasion and U.S. and EU sanctions imposed in response. By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have been replaced by newer and more efficient ones needing less fuel per kilowatt. Global coal mine production was 8,173 million tonnes in 2021 compared with 8,180-8,256 million per year between 2012 and 2014. But mine production is also likely to set a new record this year as the surging demand for coal-fuelled generation overtakes efficiency improvements. Coal Resilience Coal’s resurgence has confounded U.S. and EU policymakers who expected it to diminish as part of their plan for net zero emissions. Between 2011 and 2021, generation from coal grew more slowly (1.2% per year) than hydro (2.0%), gas (2.8%), wind (15.5%) and solar (31.7%). As a result, coal’s share of total generation worldwide has declined 36.0% in 2021 from a recent peak of 40.8% in 2013. But the enormous growth in electricity demand (2.5% per year) ensured there has been growing demand for all sources of generation. Coal production and generation is set to continue rising through at least 2027 as the rising demand for electricity overwhelms efficiency improvements in combustion and the deployment of gas and renewables as alternatives. Turbocharged Rapid recovery after the pandemic has turbocharged these trends, boosting electricity demand and the dependence on coal-fired generation, and lifting coal consumption to a record high. Russia’s invasion of Ukraine and the resulting reduction gas exports has stimulated demand even further as generators try to minimise consumption of expensive gas and countries try to indigenise their energy supplies. In Europe, governments are encouraging coal-burning generators to remain in service for longer rather than closing in case gas flows from Russia cease in winter 2022/23. Responding to shortages and security concerns, China and India are encouraging domestic miners to raise output to record levels to ensure adequate fuel stocks and cut their reliance on expensive imported coal and gas. China’s coal production climbed to a record 2,192 million tonnes between January and June compared with 1,949 million in the same period a year earlier and 1,758 million before the pandemic in 2019. India’s production climbed to a record 393 million tonnes between January and May compared with 349 million a year ago. Fuel Shortage Despite the rapid growth in domestic coal production in China and India, there is still a worldwide shortage of fuel, which has sent coal prices to their highest level in real terms for more than 50 years. U.S. and EU sanctions have intensified upward pressure on prices by re-routing Russian coal to Asia and coal from Australia and Indonesia to Europe, resulting in longer and more expensive voyages. Coal is the bulkiest and most expensive commodity to transport relative to its value so longer voyages have a direct and significant impact on the landed price paid by power producers. Higher gas prices in Europe are pulling coal prices up in their wake as coal-fired generators scramble to secure fuel in order to be able to run their units for as many hours as possible. Front-month futures prices for gas delivered in Northwest Europe have climbed to €157 per megawatt-hour from €41 at the same point in 2021 while coal prices have risen to €53 from €16. If the northern hemisphere winter of 2022/23 is colder than normal, shortages of coal, gas and electricity are likely to become severe and are likely to force some form of energy rationing or allocation. The global coal shortage is part of a wider shortage of energy evident across the markets for crude, diesel, gas and electricity. In each case, the shortage stems from the strong cyclical rebound from the pandemic and has been intensified by Russia’s invasion of Ukraine and sanctions imposed as a result. Record prices are sending a strong signal to producers to increase output and to consumers to conserve as much fuel as possible. Like crude and diesel, however, rebalancing the coal market will likely require a significant slowdown in the major economies to ease the immediate pressure on inventories and give production time to catch up with consumption.
TGS announces completion of initial project deliverables for extensive East Coast India reprocessing project
TGS has made the first phase of project deliverables for their East Coast India reprocessing project available to project participants. Final 2D-cubed, workstation-ready data will be delivered by the end of July 2022. The TGS East Coast India 2D-cubed project encompasses hundreds of thousands of kilometers of existing 2D data across an area of over half a million square kilometers offshore India’s east coast. The comprehensive project utilizes TGS’ proprietary 2D-cubed technology – a solution for generating a 3D seismic migration volume from a set of 2D seismic lines – to create a single conformable, easily accessible dataset designed to encourage and assist exploration endeavors offshore India. Will Ashby, Executive Vice President – Eastern Hemisphere at TGS, commented: ‘This new dataset is one of many TGS initiatives providing seismic to boost exploration across Asia. It will allow explorers to better develop regional models in their pre-study evaluation process. Access to this data will also increase confidence in license round decision-making processes and maximize the potential of existing seismic data in the region by employing innovative processing techniques.’ Fast-tracked 2D-cubed results provide promising insights as to how this exploration tool can enhance offshore evaluation processes
Government may shut down PCRA, focus on EVs
In a silent move, the government has decided to consider putting down the shutters on Petroleum Conservation Research Association. The thought process of the government is simple. If India is increasingly focusing on electric vehicles (read clean energy), then the present focus on petroleum conservation needs to shift. Top officials of PCRA, it is reliably learnt, have been told by some in the government that the organization would cease to exist by September, 2022, which means in just two months’time. The move comes more than four-and-a-half decades after the then petroleum and natural gas minister Morarji Desai—who held the post besides being the Prime Minister—pushed for a state-owned body which should be funded by state-owned oil and gas companies and work actively for petroleum conservation. PCRA was formed under the Ministry of Petroleum and Natural Gas. The move to look to disbanding the body has, expectedly, met with resistance from officials of PCRA, some have gone to court to seek redressal. Repeated attempts to seek reactions from the employees who went to court proved futile. An email sent to Asheesh Joshi, a senior IAS officer and executive director, PCRA, remained unanswered. PCRA, funded by state-owned oil and gas companies and energy companies, was engaged in promoting energy efficiency in various sectors of the economy. Its job was to help the government (read the ministry of Petroleum and Natural Gas) shape policies and strategies aimed at reducing India’s dependency on oil, reducing environmental impact of oil use and conserving fossil fuel. India’s demand for petroleum products is increasing at a rate of approximately 3-4% per annum. At the heart of the government’s move lies India’s big race to seek clean energy. Interestingly, a PCRA study some years ago said fuel worth Rs. 9.94 billion per annum is being burnt at traffic signals due to idling of vehicles at red lights. The study further said if India reduces its use of petroleum products by 2% per year—Rs 4000 billion — New Delhi could save Rs. 80 billion worth of imports. So, the need of the hour is to move away—slowly but steadily—from petroleum and petroleum products. The PMO is trying hard to do exactly that, claim those in the know. Experts say it is high time India makes a serious transition towards cleaner technology, especially in the light of higher oil taxes and investment in EV vehicles. And then there are the issues of increasing lifestyle standards and increased risk of infection transmission. Encouraged by the banking sector’s capacity to provide affordable financing options for automobiles, India became the fifth-largest automobile market in the world in 2020. Around 3.5 million units of commercial and passenger vehicles were sold in the country. And these vehicles continued to consume a fair share of oil and pollute air in their life cycles. India’s oil consumption was reported at 4,669.078 barrels per day in December 2020, nearly 90% of demand was fulfilled through imports. The government realizes that this, in turn, puts a heavy burden on India’s mobility ambitions. Petroleum prices in India currently hover around the Rs 100 per litre, making mobility dearer. Significant portion of petrol prices are from heavy taxes levied by state and central governments. High taxes on consumer petroleum products create the perfect condition for battery electric vehicles (BEV) and hybrid vehicles (referred to as EVs henceforth) push in India. The basic idea is to cut carbon emissions from the transportation sector. India’s 2030 EV vision includes replacing 30% private cars, 70% commercial vehicles, 40 per cent buses and 80 per cent two-wheelers. This amounts to introducing 102 million units of EVs on India’s roads. The EV sector is already getting great incubation support through subsidies. The EV market in India is estimated to touch Rs 304.16 billion in 2025. By the end of July, 2021, India received more than Rs 250 billion worth investment for the EV sector. In the first quarter of 2021, India’s total foreign direct investment was around Rs 1713.21 billion. India could get an investment of Rs 958.12 billion in the next five years, according to the report Electric Mobility in Full Gear 2021, India. And then there is the issue of job creation. Apart from the capital gain, the EV sector will create around 10 million jobs in India by 2030 in domains such as designing, testing, manufacturing, charging infrastructure, sales, battery technology, management, among others.
Pricey Russia cuts LNG supply, wants dirhams, India scouts for new fuel sources
The unstable world energy market, volatile prices, and uneven supplies may have repercussions on India’s energy security. The first hit is the GAIL LNG deal, followed by Russian demand for payment in UAE dirhams converted in dollar terms. The GAIL’s troubles are traced to the German energy regulator taking over Gazprom Germania, which operates gas to storage and supplies to industries. The move followed Gazprom moving out of the subsidiary so that it could continue business without attracting sanctions. It has led to the default in delivery of five cargos as per a 20-year-deal agreed in 2012 for 2.5 million-tonne LNG a year. This has become a problem for GAIL, which meets 50% of the nation’s LNG needs. It is scouting for alternative fuel. But it faces the problem of Russia stopping supplies to Gazprom Marketing & Trading that owned the future gas contracts for supplying to Gazprom Germania and other subsidiaries. It used to supply from Yamal LNG facility. After Russia’s stoppage of supplies, Gazprom GM&T initially managed supplies from its floating international portfolio. As prices rose to $40 a unit and supplies to Europe became lucrative it diverted supplies, leaving GAIL in the lurch. In fact, the prices are so high that Gazprom Germania is said to have margins after paying damages under the take-or-pay clause. The GAIL has option to take legal recourse, but it is cumbersome, may take years and would not address the problems of the Indian consumers. The GAIL has long-term liquefied natural gas (LNG) supply contracts from the US to Australia supplementing domestic gas supplies, though it may cost a bit more in the prevailing circumstances. Prior to the war, the US LNG used to cost one-third of the price of gas available in the spot or current market. GAIL has a 5.8 million-tonne per annum LNG contract with US suppliers. These are all linked to the US gas market, where the current rate is $10 per million British thermal unit. In comparison, the spot price of LNG in Asia is between $37 and $ 40 per million British thermal unit. GAIL and the Ministry of Petroleum are scouring the markets for ensuring supply. The Asian LNG prices are rising with intense demand from Japan, Korea and India. Trading activity in the Asia LNG market rose as traders and end-users dipped back into the spot market to secure cargoes amid increasing global supply uncertainty as the Gazprom reduction of gas flow into Europe spooked an already fractured market. The world energy markets are seeing too many oddities. India’s domestic exports, though have seen curtailment, but of late, with Russian crude being supplied to the private refiners it is being exported again. The cap through an export tax clamped on 1 July for ensuring at least 50% of the private refiners’ production has been removed. The duty, imposed following fuel shortage in a number of states, has been waived on petrol, and cut by a third on diesel and brought down the windfall tax by 27%. The tax has been reduced from Rs 6 to Rs 4 on diesel and done away on petrol. The duty has been waived on refined products and shipped from SEZs. This will give a big boost to mainly two private refiners, Nyara and Reliance. A major benefit will be to the latter as its refining is based in an SEZ in Jamnagar. The duty reduction is also said to benefit ONGC and Oil India and Vedanta. Of late, according to tenders by Indian Oil and Bharat Petroleum, diesel imports are expected to rise to their highest since February 2022 at over 48,000 barrels per day. India’s increased imports are telling on Asian fuel supply as planned petroleum supplies from China have been decreasing. India is the world’s third-largest oil consumer at about 5 million barrels a day. It is growing at 3-4% a year and the demand is likely to go up to 7 million barrels a day in a decade. According to the Petroleum Planning and Analysis Cell (PPAC), India’s oil import dependence was 85% in 2019-20, marginally declined to 84.4% in 2020-21 and again has risen to 85.6% in 2021-22 and in April 2022, it rose to 86.6%. This year’s imports are to surge beyond the 212.2 million tonnes of crude last year. The new exploration licences are a good move, but it may take a decade to start new production. The aim is to reduce imports to 50% by 2030, which is too ambitious. Apart from long gestation the capital requirement is extremely high. India despite odds remains dependent on Russian oil. India’s crude oil imports from Russia have jumped over 50 times since April and now make up for 10% of all crude bought from overseas. Russian oil made up for just 0.2% of all oil imported by India prior to the Ukraine war. The country is facing some petrol and diesel shortages as fuel pumps have reportedly gone dry in several states, including Uttarakhand, Rajasthan, Andhra Pradesh, Madhya Pradesh, some parts of eastern and north-eastern states. A neutral India has to trudge through a difficult phase to maintain supplies from Russia and the West as well as keep the domestic prices low.
ONGC inks deal with GAIL, AGCL on Tripura gas sale
The state-owned exploration giant ONGC has signed a gas-selling agreement with GAIL India and Assam Gas Company Ltd (AGCL) to monetise natural gas at its upcoming gas well at Khubal under Panisagar of North Tripura. The agreement was signed by executive director of ONGC, Tripura Asset, Tarun Malik, managing director of AGCL Gokul Chandra Swargiary and CGM-zonal head, GAIL, R Choudhury on behalf of their respective companies in a brief function here on Friday. Addressing the gathering Malik said Khubal will be the 10th gas producing field of ONGC in Tripura, which has been working in gas exploration activities since 1976. According to the agreement, ONGC will supply 50,000 standard cubic metres per day of gas to GAIL and AGCL and a total 0.1 million standard cubic metres per day (MSCMD) gas will be supplied from ONGC’s Khubal gas collecting station. Khubal station would have a capacity to process 0.44 MSCMD of gas. He said more gas will find its way into the industry and people’s homes with a positive impact on their living standards that in turn will boost the economy of the region. The ONGC has embarked on a mission to produce more gas from its fields in Tripura that would incentivise local business and industries. Highlighting the upcoming Indradhanush Gas Grid Ltd — a joint venture of IOCL, ONGC, OIL and NRL — Malik said the ministry of petroleum has envisaged to implement Hydrocarbon Vision 2030 for the northeast region to accelerate its development. The pipe laying work of IGGL is progressing impressively across the region, which will be a game-changer for the northeast.
Reliance expects gas price to rise in October, wants removal of ceiling prices
Reliance Industries Ltd expects prices of natural gas in India to rise again in October but wants government-dictated caps to go, in a bid to align domestic rates with global energy prices. The conglomerate, controlled by billionaire Mukesh Ambani, expects the price cap for its KG-D6 gas sales to rise over the current $9.92 per million British thermal units, Sanjay Roy, senior vice-president for exploration and production, said in an investor call following the announcement of the firm’s quarterly earnings on Friday. After remaining a loss-making provision for several quarters, Reliance’s gas exploration business has begun reaping rewards of a global surge in energy prices that have already pushed the rates to a record high. The government sets gas prices every six months based on international rates. The price of gas from old or regulated fields was more than doubled to a record USD 6.1 per mmBtu from April 1, and that for difficult fields like those lying in deepsea to $9.92 per mmBtu. Rates are due for a revision in October. It is anticipated that the price of gas from old fields of state-owned Oil and Natural Gas Corporation (ONGC) will be hiked to about $9 per mmBtu and the cap for difficult fields will rise to double digits. Reliance produced about 19 million standard cubic meters per day of gas from its newer fields in the eastern offshore KG-D6 block in the April-June quarter. KG-D6 block lies in deepsea and so gets a price equivalent to that for difficult fields. “Price ceiling for KGD6 (R-Cluster/Sats) revised to $9.92 per mmBtu for H1FY23 (April-September 2022) which is expected to rise further for H2FY23 (October 2022 to March 2023),” Roy said. But this rate remains disconnected with global prices. “We do see that the domestic price ceiling remains disconnected, whether the prices are elevated or when prices fall. And you know we are continuing our advocacy for removal of ceiling prices. Overall, we expect higher gas price realizations in FY23 and in the quarters to come,” he said. Reliance got a price of $22.48 per mmBtu for 0.7 mmscmd of gas it produces from coal seams (CBM) from blocks in Madhya Pradesh. There is no cap on CBM gas price. Higher gas prices propelled a 80.5 per cent rise in revenue from the business to Rs 36.25 billion during April-June and a 76 per cent jump in EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) to Rs 27.37 billion. Roy said the company is expecting the MJ field in the KG-D6 block to be on stream by the third quarter of this fiscal year, which will help take the output from the block to about 30 mmscmd. “Overall, the outlook is, once the MJ field is commissioned, we should be progressively moving towards delivering more than a billion cubic feet per day (30 mmscmd) by FY24 (April 2023 to March 2024),” he said. On the elevated global gas prices, he said the shift in European demand from Russian gas to LNG and some supply destruction are driving prices. Current prices of benchmark JKM are ruling at about $38 per mmBtu. “So, prices continue to remain elevated and are expected to, given the challenges that are there today,” he said. The Indian gas market outlook, he said, remains robust, with the availability of domestic gas being one of the reasons. “Because domestic gas particularly like in KG-D6, where there is a price ceiling and that is much in demand as compared to the market prices that are currently prevailing at these times,” he said. He further noted, “Now, in terms of price ceiling, as you all are aware and I mentioned earlier, the price must move up and we will see higher realizations. It is expected that, based on higher energy prices, this will go further up.” Reliance and its partner bp plc of UK produce about 19 million standard cubic meters per day (mmscmd) of gas from two sets of new fields in the deepsea block KG-D6. Reliance-bp is currently producing about 20 per cent of India’s total domestic production and MJ would help increase this to up to 30 per cent.
IEA Chief: Europe Must Cut Gas Usage 20% To Survive Winter
After calling on all member states to reduce gas consumption by 15% in the face of the threat of a complete Russian gas cutoff, the IEA says the European Union will need to cut even more in order to get through the winter. “Even if there is no single accident… #Europe still needs to reduce its gas consumption about 20% compared to today in order to have safe and normal winter months,” IEA chief Fatih Birol said, issuing what he called a “red alert” for energy markets. The short-term issue with the Nord Stream 1 pipeline may have been resolved, Birol told CNN, but “it’s too early to be happy about this”. The amount Europe is receiving now from Russia is only about one-third of what it was receiving prior to the force majeure, and the IEA chief warned that even that reduced flow “can be cut anytime”. After a 10-day pause for regular maintenance, Russian gas flows via Nord Stream resumed on Thursday morning, with orders for gas set at around 40% of Nord Stream’s capacity, the level from before the maintenance after Russia slashed flows in mid-June. Flows early on Thursday were at around 21.5 GWh, compared to 30GWh prior to the start of maintenance on July 11th, and compared to 70 GWh before Russia reduced supplies by 60% on June 13th. On Wednesday, the European Commission unveiled measures for the bloc to conserve gas to pre-empt a Russian cutoff, asking member states to reduce consumption by 15% until next spring. According to Birol, this won’t be enough to ensure a smooth winter for Europe, and there is no alternative to consumption reductions. Even assuming that the current Russian gas flow is maintained, and considering all the LNG Europe is getting from the United States and elsewhere, plus other natural gas sources, and even if there are no accidents that hamper supply, Europe still needs to reduce more, starting now, Birol said. There is not enough gas around the world for Europe to rely on, the IAE chief said, and there is no choice but to reduce consumption to avoid shortages and rationing this winter. If the bloc waits, and fails to adopt a coordinated method, once we get into the winter months, the measures will be “more drastic”. Birol is calling on Europe to develop an emergency plan, noting that Germany is the most vulnerable, followed by Italy and some Eastern European countries.
Spain, Portugal, Greece Reject EU 15% Gas Usage Cut
Further cracks in a united front to tackle an energy crisis in Europe have arisen Thursday, with Spain, Portugal and Greece rejecting the bloc’s plan to reduce natural gas consumption by 15% between this August and next Spring. Just hours after a dire warning by IEA chief Fatih Birol that Europe would need a 20% cut in consumption to make winter tolerable, officials in Madrid and Lison said they would not support the 15% initiative in the face of a potential Russian gas cutoff. According to both Spain and Portugal, mandatory reductions are unfair, particularly considering that both countries use far less Russian gas than other European Union member states. “We will defend European values, but we won’t accept a sacrifice regarding an issue that we have not even been allowed to give our opinion on,” Spain’s Ecological Transition Minister Teresa Ribera said, as reported by the Associated Press on Thursday. “Not matter what happens, Spanish families won’t suffer cuts to gas or to the electricity to their homes,” the official added, noting that complying with such a mandatory EU measure “would serve for nothing if the gas that could not be used by Spanish industries could not then later be used by the homes or industries of other countries”. Speaking to Xinhua, Spain’s minister for ecological transition, Teresa Ribera, described gas consumption in Spain as reasonable. “We want to help, but we also want to be respected,” Ribera said, adding that “a disproportionate sacrifice cannot be imposed on us”. Likewise, Greece, which relies on Russia for some 40% of its gas, has objected to the EU plan, issuing its own contingency measures. Greece has been spared any disruptions in natural gas supplies, largely thanks to efforts to import large volumes of LNG, Reuters reports. Instead, Greece is proposing a EU cap mechanism on wholesale gas prices and joint gas purchases as a “European solution”, Reuters cited government spokesman Giannis Oikonomou as saying Thursday.
The Companies Taking Advantage Of America’s LNG Boom
Over the past few years, dozens of U.S. midstream companies have set their sights on natural gas pipelines and export terminals as the U.S. natural gas and LNG markets explode while crude oil pipeline capacity continues to exceed production. Natural gas projects are expected to be the fastest growing pipeline sector as production rises and shippers find new customers in Europe and Asia. Now, as analysts tell Reuters, it’s all about boosting U.S. capacity and adding new pipelines to transport natural gas to LNG export terminals. “Everybody has pretty much given up on ever doing another long-haul pipeline anywhere outside of Texas and, maybe, Louisiana,” Bradley Olsen, lead portfolio manager for Recurrent Investment Advisors’ midstream infrastructure strategy, has told Reuters. Europe’s natural gas demand has skyrocketed as the EU tries to lower its reliance on Russian natural gas following its invasion of Ukraine. Europe has displaced Asia as the top destination for U.S. LNG, and now receives 65% of total exports. The EU has pledged to reduce its consumption of Russian natural gas by nearly two-thirds before the year’s end, while Lithuania, Latvia, and Estonia have vowed to eliminate Russian gas imports outright. The European gas crisis has only deepened after Russia cut off the gas supply to Poland and Bulgaria, ostensibly for failing to pay for gas in roubles, sending European gas prices soaring. The move marks a ratcheting up of tensions and could reduce supplies to Europe, as many pipelines pass through Poland en route to the rest of the continent. Adding to supply woes, Russia’s Nord Stream 1 pipeline that supplies Germany has gone offline for scheduled maintenance. While it partially resumed operations on July 21st, Europe feared that it could be delayed for political leverage. Not surprisingly, Europe has become the top importer of U.S. LNG, taking about 65% of U.S. exports. The U.S. Energy Information Administration (EIA) has forecast that the United States will surpass Australia and Qatar to become the world’s top LNG exporter this year, with LNG exports continuing to lead the growth in U.S. natural gas exports and average 12.2 billion cubic feet per day (Bcf/d) in 2022. The United States currently ranks second in the world in natural gas exports, behind only Russia. According to the EIA, annual U.S. LNG exports are set to increase by 2.4 Bcf/d in 2022 and 0.5 Bcf/d in 2023. The energy watchdog has forecast that natural gas exports by pipeline to Mexico and Canada will increase slightly, by 0.3 Bcf/d in 2022 and by 0.4 Bcf/d in 2023, thanks to more exports to Mexico. In contrast to natural gas, crude oil pipeline capacity continues to far exceed production. Currently, there are ~8 million barrels per day of Permian crude pipeline capacity, significantly more than the 5.5 million bpd of production, according to EIA and Morningstar figures. Natural Gas and LNG Projects The pivotal Permian Basin is preparing to unleash a torrent of gas and gas projects to meet exploding LNG and natural gas demand – coming just in time, given that limited takeaway capacity is expected to start being keenly felt in 2023, which could lead to negative pricing in the basin. Energy Transfer LP (NYSE: ET) is looking to build the next large pipeline to transport natural gas production from the Permian Basin. Energy Transfer has also started building the Gulf Run pipeline in Louisiana to move gas from the Haynesville Shale in Texas, Arkansas, and Louisiana to the Gulf Coast. Energy Transfer is expected to report Q2 earnings on 3rd August 2022. The consensus EPS forecast for the quarter, based on five analysts as per Zacks Investment Research, is $0.28 compared to $0.20 for last year’s corresponding period. Back in May, a consortium of oil and natural gas firms, namely WhiteWater Midstream LLC, EnLink Midstream (NYSE:ENLC), Devon Energy Corp. (NYSE: DVN), and MPLX LP (NYSE: MPlX) announced that they had reached a final investment decision (FID) to move forward with the construction of the Matterhorn Express Pipeline after having secured sufficient firm transportation agreements with shippers. According to the press release, “The Matterhorn Express Pipeline has been designed to transport up to 2.5 billion cubic feet per day (Bcf/d) of natural gas through approximately 490 miles of 42-inch pipeline from Waha, Texas, to the Katy area near Houston, Texas. Supply for the Matterhorn Express Pipeline will be sourced from multiple upstream connections in the Permian Basin, including direct connections to processing facilities in the Midland Basin through an approximately 75-mile lateral, as well as a direct connection to the 3.2 Bcf/d Agua Blanca Pipeline, a joint venture between WhiteWater and MPLX.” Matterhorn is expected to be in service in the second half of 2024, pending regulatory approvals. WhiteWater CEO Christer Rundlof touted the company’s partnership with the three pipeline companies in developing “incremental gas transportation out of the Permian Basin as production continues to grow in West Texas.” Rundlof says Matterhorn will provide “premium market access with superior flexibility for Permian Basin shippers while playing a critical role in minimizing flared volumes.” Matterhorn joins a growing list of pipeline projects designed to capture growing volumes of Permian supply to send to downstream markets. Early this month, WhiteWater revealed plans to expand the Whistler Pipeline’s capacity by about 0.5 Bcf/d, to 2.5 Bcf/d, with three new compressor stations. Although the companies have not divulged the cost and revenue estimates of the Matterhorn, a project of that magnitude is likely to provide years of predictable cash flows to these producers–which, incidentally, are all high-dividend payers. Oklahoma-based Devon, one of the Permian’s top producers, recently said it expects Permian production to reach nearly 600,000 boe/d in the second quarter. The new pipeline will help support the company as it increases its production in the Permian in the coming years. DVN stock currently yields (Fwd) 7.3% and has returned 54.3% year-to-date. MPLX has several other expansion projects under construction. The company says it expects to finish construction on two processing plants this year, and recently reached