S&P Global Platts – Natural Gas is on the move as the massive drawdown in active rigs in Oklahoma’s SCOOP/STACK plays has prompted pipeline flows out of the region to plummet over the past month, adding upward pressure to Midwest prices.
Falling production receipts along the four largest pipelines running through Oklahoma has led to lower natural gas supply from the Midcon Producing region to reach Upper Midwest markets, according to S&P Global Platts Analytics data.
Flows between Oklahoma and the Upper Midwest have averaged 2.6 Bcf/d over the past 30 days. This is down 1 Bcf/d from the 30 days prior. The declines are spread among Northern Natural Gas Pipeline, Panhandle Eastern Pipeline, Natural Gas Pipeline and ANR Pipeline.
Northern Natural has seen some of the steepest drops. Falling receipts in both Oklahoma and Texas have lowered these flows, with Oklahoma taking slightly more of the losses. Receipts in Oklahoma fell 284 MMcf/d the past 30 days from the thirty days prior, more than the losses seen in Texas which fell 203 MMcf/d. Within Oklahoma, multiple delivery points appear to be splitting the losses, with none losing more than 74 MMcf/d. Texas, however, still provides the bulk of flows on the pipeline, with Texas receipts averaging 1.7 Bcf/d the past thirty days compared to Oklahoma’s 78 MMcf/d.
The falling supply has helped uplift regional prices. NGPL Midcon basis has averaged 9 cents/MMBtu behind Henry Hub over the last 30 days. That is up from minus 22 cents/MMbtu the thirty days prior. However, as receipts and flows return, this should once again weight down on Midwest prices, according to Platts Analytics.
Panhandle Eastern has seen a 268 MMcf/d decline between the last 30 days and the 30 days prior. It is now averaging 589 MMcf/d. Here, however, falling Oklahoma receipts are contributing to virtually all of the declines. Receipts in Oklahoma have averaged 428 MMcf/d, down from 654 MMcf/d the thirty days prior. Receipts from Texas, however, only declined 55 MMcf/d during this time.
NGPL has seen slightly lower declines. At Station 106 on the Kansas and Nebraska border flows have declined by 175 Mmcf/d. Again, the bulk of the drop has come from Oklahoma supply. Flows out of the Permian have remained relatively flat at around 350 MMcf/d, while Oklahoma receipts onto the pipeline across the state fell 322 MMcf/d, according to Platts Analytics.
Lastly, ANR flows from the Midcon Producing to the Midcon Market have averaged 510 MMcf/d the past 30 days. This is down 146 MMcf/d from the 30 days prior.
While receipts in Oklahoma on these four pipelines have fallen roughly 900 MMcf/d there are signs this could be relenting. Platts Analytics SCOOP/STACK production sample the past seven days rose to 730 MMcf/d, 149 MMcf/d higher than the seven days prior. These gains could continue as stronger oil prices once again incentivize production.
