Over the past week, spot prices at the Waha gas trading hub in the Permian Basin fell as low as -$9.75 per million British thermal units, with expectations that it could hit -$10 when pipeline capacity tightens as operators perform seasonal maintenance later this year, traders told Bloomberg.
That’s because drilling in the prolific Permian Basin yields both oil and natural gas. But while an extensive network of pipelines exists to bring crude to market, there’s less infrastructure to transport natural gas, creating bottlenecks and localized surpluses.
As a result, negative gas prices aren’t that unusual in West Texas, and have been that way more often than not so far this year. But last week saw the lowest weekly average Waha spot price on record.
Since negative prices mean producers have to pay to someone to take the supply off their hands, excess natural gas is often burned off, and so-called flaring events this season are at five-year highs.
What a shame they can’t move the stuff and sell it.