The 580-mile Matterhorn Express Pipeline is set to begin operations within the next month, moving natural gas from a West Texas terminal to Katy, outside of Houston. The construction of Matterhorn and a handful of other pipelines in the area are being closely monitored by analysts worldwide due to the increasing need for reliable energy at the statewide and global level.
Energy analyst Matt Smith from Kpler shared his insights on the pipeline’s construction in a recent interview with Texas Standard. He mentioned that the addition of the pipeline would help alleviate the bottleneck in the Permian Basin, particularly the negative regional price point, Waha. This bottleneck has been affecting production in the region, leading to days where the prices were negative.
With the Matterhorn Pipeline’s capacity of two and a half billion cubic feet (Bcf) a day, it is expected to increase natural gas production in the Permian Basin, potentially affecting oil production as well. Additionally, three more pipelines are in progress to further increase the capacity to get gas out of the region.
The increased production from the Permian Basin is expected to result in higher LNG exports, with the U.S. already being a global leader in LNG exports. The U.S., Qatar, and Australia account for 60% of total LNG exports, with the U.S. surpassing both countries last year. The U.S. is expected to maintain its number one spot with the addition of export and pipeline capacity.
In terms of export destinations, Europe has become a significant customer for U.S. LNG exports, with two-thirds of U.S. energy exports going to Europe last year. This shift was influenced by the Russia-Ukraine conflict and Europe’s efforts to secure natural gas supply ahead of winter.
Despite the increase in production and exports, it is unlikely that there will be a significant price increase. The gradual increase in prices will help relieve the bottleneck in the Permian Basin without causing a drastic change in market prices. The domestic demand for natural gas in Texas, primarily for power generation, is expected to continue growing, making natural gas a crucial fuel source for the state.
Overall, the construction and operation of the Matterhorn Express Pipeline and other pipelines in the Permian Basin are expected to have a positive impact on energy markets, both domestically and globally. The increase in production and exports will help meet the growing demand for energy while maintaining stable market prices.
