El Paso Permian and Waha cash natural gas prices moved deeper into negative territory Wednesday, amid a supply glut in the Permian Basin.
El Paso Permian Preliminary Platts index stood at a new low of minus $5.12/MMBtu, shedding more than $2 on the day after trading as low as minus $8.50/MMBtu. The previous low was set on Tuesday, when pieces settled at minus $3.33/MMBtu for gas flowing Wednesday.
Waha, another key pricing point in the region, averaged a record low minus $6.07/MMBtu, wandering between minus $9/MMBtu and minus $1.5/MMBtu. The previous lowest settle was Tuesday when it finished at minus at minus $3.76/MMBtu.
Prices continue to fall even though Permian Basin production has been coming off over the past three days and is set to stand at 8.3 Bcf Wednesday, after averaging 9.2 Bcf in the last 10 days of March, according to data from S&P Global Platts Analytics. The three-year average during the same time period in March is 5.9 Bcf/d.
One reason for this free fall may be the milder demand expectation during the shoulder season. Total Southwest demand averaged about 7.3 Bcf/d over the past three days after averaging 8.4 Bcf in March, the tail-end of winter.
Another reason could be the maintenances which has kept gas stranded in the region.
Prices started to slide on March 18 when a force majeure was announced at the Lordsburg and Florida compressor station in New Mexico on the El Paso Natural Gas system. Spot prices settled at 59 cents/MMBtu on that day, after averaging $1.51/MMBtu, the prior 17 days.
Work at the Florida compressor station wrapped up Saturday and a force majeure there was lifted, while aforce majeure at Lordsburg Station is expected to be lifted April 5.
In addition to these, there are two other maintenance efforts, one upstream on El Paso and the other on Transwestern.
El Paso's April maintenance schedule shows the Keystone compressor station in the Permian is restricted to 219 MMcf/d. It normally averages 779 MMcf/d, which could be further constraining the pipeline as flows reroute to access the South Mainline. Westbound flows through Cornudas have averaged 2.1 Bcf/d over the last three days, which is about 400 MMcf/d lower than normal which could still be causing EP Keystone to trade lower.
Transwestern has a planned outage at Station 8 Compressor Station in Corona, New Mexico, effective April 2-18, reducing total capacity from 750,000 MMBtu/d to approximately 480,000 MMBtu/d, according to the company's website.
Unfazed by falling Waha prices since late March, regional power prices were higher from February to March, likely to be driven by lower wind generation and high power demand from oil and gas drilling activities.
ERCOT West Hub next-day on-peak prices ranged between $6/MWh and $40/MWh over the last two weeks, while Waha cash prices hovered around zero over the same time, pushing the power prices to average $30/MWh in March, over 30% higher than the month-ago level.
The strength in power prices seemed to be supported by weaker wind generation, as daily average output was 8.2 GW in March, down about 1 GW from February.
Conversely, high wind generation seemed to push power prices lower.
Notably, West Hub next-day on-peak prices for Wednesday delivery dipped below $7/MWh, the lowest mark since April 2018, as systemwide wind generation was set to average almost 16 GW, likely to be in the top three on record.
