(Reuters) by Scott DiSavino – In an unusual event, U.S. natural gas prices in West Texas have been trading in negative territory for more than two weeks, largely due to a lack of pipeline space, forcing some drillers to pay those with spare pipeline capacity to take unwanted gas. Spot prices at the Waha hub – where prices for gas in the Permian basin are set – fell to a record low of minus $4.28 per million British thermal units last week. Prices have been negative in the real-time or next-day markets since March 22. WHY IS THERE SO MUCH NATURAL GAS SUPPLY? The Permian is the nation’s largest shale oil field, where production now exceeds more than 4 million barrels per day (bpd). But oil output also produces what is known as associated gas, seen by crude drillers as a waste product to be burned off or “flared” because there are not enough pipelines to remove it. Construction of new oil and gas pipelines in the Permian has not kept up with output, which has more than doubled over the past three years as the United States has risen to become the world’s largest oil producer. But while oil… continue reading
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