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It’s largely associated methane co-produced from oil production in the Permian. The economics of co-production means that the gas is often the cheapest in the
by jakebol 2mo ago
It’s largely associated methane co-produced from oil production in the Permian. The economics of co-production means that the gas is often the cheapest in the nation and can have negative prices during large oil production swings. I believe it went nearly -$10 MMBtu this year at one point.
- Lerc 2mo agoThat would suggest if no-one purchased it, it would just be flared off. Does the negative price come about because of pathological financial conditions, or is it the case that the producers are financially penalised for flaring?
- jakebol 2mo agoIt acts as a negative feedback signal for producers because there is limited physical pipeline capacity. I think there are some financial incentives to reduce flaring for the LNG export market, but only a small amount of gas was flared in that region (less than 5%).