U.S. hydrocarbon production continues its impressive growth trajectory despite stringent capital discipline exercised by oil and gas producers in recent years. The Permian shale play stands out as a major contributor to this expansion, defying expectations and consistently boosting hydrocarbon output. Notably, even as natural gas prices in the region occasionally dipped to near zero or even negative levels, Permian Natural Gas Liquids (“NGLs”) rich gas production continued to rise, primarily driven by the economics of crude oil. With crude oil prices staying in the $65-80/bbl goldilocks range, will capacity of downstream NGL infrastructure be adequate to accommodate this surge in Permian NGL volumes?

Understanding and navigating the complexities of the evolving NGL takeaway pipeline situation from the Permian Basin is essential for stakeholders across the energy sector to effectively manage risks, safeguard commodity values/netbacks and capitalize on growth opportunities in this dynamic environment. This article provides benchmarking and perspectives on NGL egress from the Permian.

Current Permian NGL Pipeline Egress

When it comes to pipeline take-away constraints out of the Permian, the spotlight has largely been on natural gas and less so on NGLs and crude. However, Permian NGL takeaway pipeline situation is not far behind given the possibility for positive FIDs on multiple expansions LPG/ethane export terminal expansions in the U.S. Gulf Coast. As of 1Q 2024, aggregate NGL pipeline capacity downstream of the Permian basin was operating at ~90% utilization, confirming the need for additional capacity to meet growing downstream demand. While expansions are underway, questions linger on their sufficiency in accommodating projected NGL growth. Therefore, aligning NGL marketing strategies with market realities, such as securing firm transport capacity versus relying on walkup capacity, is pivotal.