Tuesday, January 22, 2008
Long-suffering Rockies producers are seeing the light at the end of the basis tunnel as the landmark Rockies Express Pipeline LLC (REX) wends its way eastward. But what the industry has yet to open its eyes to is the trouble brewing down South, says an industry analyst.
"There's a possibility that the Gulf of Mexico is going to experience its own little 'Rockies' problem," says Bentek Energy LLC CEO Porter Bennett. "You've got a whole bunch of new gas coming in via the different pipelines. Production is increasing very strongly in East Texas, Fort Worth, Arkla and Arkoma. You've got all these new pipelines bringing it to Perryville [LA]."
In a forthcoming study, Bentek looks at the Gulf Coast region, which it defines roughly as the northern edge of Arkansas down to Houston and out to the Gulf and across to the eastern edge of Louisiana. "The problem is that the ability to get gas out of that region hasn't expanded," Bennett told NGI, noting that on peak days the legacy pipelines out of the Gulf Coast run 90-95% full.
"I don't think people fully appreciate the magnitude of what's scheduled to be developed out there [in the Gulf]," Bennett says. "A second part of it is I think people were real focused on getting more East Texas gas to the Gulf where they just assumed you could take it away from there, and because of the way the market is, it seemed like you ought to be able to. But the reality is [the pipeline capacity] is not there."
The Bentek report, to be titled "'I' of the Storm," is to be published in about a month.
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