Houston—WhiteWater Midstream launched an open season April 12 for commitments for up to 2 Bcf of firm natural gas storage capacity at a Texas facility that serves the Permian Basin.
Demand for more infrastructure to facilitate increased gas production from the prolific shale play has increased in recent years.In particular, private equity-backed WhiteWater has been expanding its gas operations in the region. It partnered with MPLX, WTG and Stonepeak on the 450-mile Whistler pipeline to move gas from the Permian to Agua Dulce. It also partnered with MPLX on Agua Blanca, an intrastate natural gas pipeline that serves the Permian's Delaware Basin.
WhiteWater's Waha Gas Storage facility consists of underground salt caverns in Pecos County, adjacent to the Agua Blanca header system. There are six existing caverns and five additional permitted caverns. The facilities can provide about 10 Bcf of storage capacity once fully developed.
The open season, which runs until May 21, is seeking commitments that will be associated with about 200 MMcf/d of maximum daily injections and withdrawals. Customers will be given injection and withdrawal rights based on their total capacity commitments, WhiteWater said in a statement.
Service for the capacity contracted under the open season is expected to begin on or around July 1, 2022.
Operators in the Permian have continued to add rigs to market in the $60/b WTI price environment. While oil majors have remained disciplined with spending and rig increases, private companies and some large cap operators have been driving recent growth in US drilling activity, mainly in the Permian, according to S&P Global Platts Analytics data.
With the lure of oil comes increasing amounts of associated gas being lifted. The Energy Information Administration recently raised its US natural gas consumption forecasts for the rest of 2021. While use of the fuel in the power sector has been under pressure, demand has been strong for feedgas from Gulf Coast LNG export terminals.
US LNG feedgas deliveries remain near all-time highs, with netbacks out of the USGC remaining above $2.50/MMBtu through the end of spring, shifting upside risk to the Platts Analytics forecast for April and May.
With European storages recently drawing down hard on sparse LNG deliveries combined with concurrent cold weather, Platts Analytics expects LNG demand to be much more supported this summer compared with 2020 as storage stocks are replenished. That is expected to result in near full contracted US export utilizations with low risk of significant cargo cancellations–a bullish sign for Texas gas producers and midstream operators.
