As dawn breaks over the sprawling landscapes of West Texas, a quiet hum of anticipation filled the air. The Matterhorn Express Pipeline, a 580-mile lifeline snaking through the rugged terrain, was set to begin operations in less than a month. From a dusty terminal in West Texas to the outskirts of Katy, near Houston, this pipeline would soon carry natural gas across the state, marking a pivotal moment in Texas’ ongoing energy evolution.
For months, energy analysts worldwide had been closely monitoring the construction of Matterhorn and other pipelines in the region, with expectations of significant changes in the global energy market.
The Permian Basin, known for its abundance of liquefied natural gas (LNG), had been bottling up energy for far too long.
According to Energy analyst Matt Smith from Kpler who spoke to the Texas Standard show..
What could break crude oil out of its range?@mattvsmith01 joins @TomWhite_S with a rundown of the economic and geopolitical factors impacting #CL_F price activity lately:
— Schwab Network (@SchwabNetwork) August 27, 2024
You have this regional price point, Waha, which is based in the Permian Basin, and it has been negative for about half the days this year. The addition of this pipeline essentially starts to alleviate that bottleneck, which means more production can leave the region. Now, what this will likely do is spur on more natural gas production in the Permian – potentially oil production, too, because oil has also been under the effects of this excess natural gas in the region, because there’s a limit to how much natural gas can be flared. So, we should definitely see more natural gas production, potentially more oil, too.
Smith explained, a reflection of the region’s inability to move its supply efficiently. But with the introduction of the Matterhorn Express, that was about to change.
The bottleneck is finally loosening, and natural gas production is ready to surge. The data painted a clear picture – the new pipeline would enable more production to leave the region. And it wasn’t just natural gas; oil production could also benefit. There had been limits on how much natural gas could be flared, and this pipeline provided an opportunity for both industries to expand.
Waha prices had long been a thorn in the side of producers, but now, as the pipeline prepared to carry 2.5 billion cubic feet of natural gas daily, there was an air of optimism. “There’s a lot of pent-up supply that’s going to be released,” Smith noted. And with three other pipelines soon to join Matterhorn, the Permian Basin’s reach would extend well beyond Texas.
Across the state, thoughts turned to global implications. The U.S., already the leader in LNG exports, was set to solidify its position. But while the global market buzzed with excitement, Europe – still reeling from the Russia-Ukraine conflict – seemed less desperate for LNG than before.
“Last year, two-thirds of U.S. energy exports went to Europe,” Smith explained. Now, as Europe’s natural gas storage neared capacity ahead of the winter months, it seemed the tides were shifting. Yet the U.S. remained steadfast in its role as a global energy provider, with both domestic and export demands shaping the future.
Back home in Texas, the pipeline would have profound effects on the state’s energy landscape. Natural gas already accounted for half of the state’s power generation, with wind, solar, coal, and nuclear filling out the rest. But as demand for energy continued to grow, natural gas was still the backbone, the base load fuel that ensured reliability when the sun wasn’t shining and the wind wasn’t blowing.
The future of energy, both for Texas and the world, was changing. And the Matterhorn Express Pipeline, a symbol of innovation and expansion, was at the center of it all.
