The Permian continues to deliver record gas volumes. At the same time, gas demand at the US Gulf Coast continues to grow as more LNG facilities come online.
Yet gas pricing at the Permian remains in negative territory
with a $5-7/mcf discount to pricing at Gulf Coast hubs. Egress remains
constrained but should ease with pipeline expansions and Matterhorn coming
online.
Looking forward and further downstream, record LNG exports
could see a softer LNG flush market – expect merchant revenues (i.e. excess
volumes above contracted SPAs) at Gulf Coast LNG facilities to decline in the
coming years.
In contrast, pipeline revenues will see growth with
pipelines being booked to capacity. Further optionality for pipelines in the
case of lower LNG excess volumes trading by supplying existing and new gas
power plants in the Gulf Coast region – Texas will be an attractive region for
power intensive datacenter development.
More generally, the US should see c.2.5% load growth per
year over the next 10 years – with 60% driven by datacenters, 40% from
reshoring/reindustrialisation and electrification (20% each). This will
need to be met by building new gas generation, renewables (onshore solar), and
grid stabilisation with BESS. Coal retirement delays (which kicked off during
the Biden administration) will also be needed in a truly “all of the above”
solution.
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