Just last week, the world recorded its hottest day ever.
Deadly heat waves scorched places like Texas, Mexico, and India. In the southern United States, the heat index reached triple digits.
Yesterday, we talked about Texas’ heat and its impact on power supply. We said that rising temperatures increase the demand for electricity.
That’s especially true for Texas. It consumes more energy than any other state.
But Texas doesn’t just use power. It also produces most of the natural gas that generates electricity in the United States. Then, it distributes this supply around the world.
And that’s largely because of an area called the Permian Basin.
Let me explain…
Permian Basin Natural Gas
Natural gas is a type of fossil fuel found beneath the earth’s surface.
It’s a natural mix of gaseous hydrocarbons consisting mostly of methane.
In some cases, companies drill for it. In other cases, it’s extracted through a process called fracking. Then, it’s processed, stored, distributed, and sold.
To create electricity, natural gas is burned in combustion turbines. This process produces mechanical power. Generators then convert this mechanical power to electric power.
Natural gas can take on two main forms. The first form is compressed natural gas (CNG). CNG is pressurized to become more compact. It can then be delivered through pipelines over land.
The second is liquid natural gas (LNG). LNG is frozen into liquid form, making it ideal for transportation by ship.
The Permian Basin, located in western Texas and southeastern New Mexico, is the second-largest natural gas-producing basin in the U.S. It spans 86,000 square miles and contains more than 7,000 separate fields.
But even though the Permian Basin is only the second-largest basin, Texas produces more natural gas than any other U.S. state. In fact, Texas makes up 27% of total U.S. natural gas production.
During the first half of 2022, the U.S. overtook Russia to become the world’s largest liquid natural gas exporter.
We have Texas to thank for that, too. If Texas were a country, it would be the world’s third-largest natural gas producer. The Permian Basin is critical to that position.
Last year, extreme heat and cold increased the need for power. That’s why gross natural gas withdrawals from the Permian Basin hit an annual record high of 21 billion cubic feet per day (Bcf/d).
To cover rising energy demands, annual gross natural gas production in the Permian region has risen steadily for the past 10 years. Last year’s growth rate was 14% over that of 2021.
And right now, production keeps hitting record highs. You can see that in the chart below…
Permian Basin Natural Gas Is Cleaning Up
After various air pollution citations, operators in the Permian Basin are cleaning up their act. They’re deploying more technology to reduce carbon emissions.
This way, the natural gas produced will be able to pass stricter international emission standards.
That bodes well for natural gas-importing countries with higher regulation standards. This includes large countries in the European Union such as Germany and Italy.
When Texas exports cleaner natural gas, its production will reach more countries and meet their growing demand.
And as Permian Basin natural gas production expands, midstream pipeline companies – which transport natural gas to terminals for export – will see more business.
Companies operating in the region are gearing up to bring an extra 4.2 Bcf/d of new pipeline capacity online by late 2024. This 62% increase will allow for even more production to reach LNG terminals on the U.S. Gulf Coast for domestic use and export.
In 2021, Texas LNG export terminals accounted for half of all U.S. LNG exports. That amount dipped in 2022 due to a fire at Freeport LNG, one of its major terminals. But the facility was repaired in early 2023. That means more LNG supply is already flowing from Texas this year.
Overall, natural gas production will increase as pending pipeline infrastructure projects are completed in Texas and the region.
Four major projects under construction will enable more supply to pass through liquefied natural gas terminals on the U.S. Gulf Coast. These terminals are the Whistler Pipeline Capacity Expansion, Permian Highway Pipeline, Gulf Coast Express Pipeline, and Matterhorn Express Pipeline.
When these terminals are completed, additional LNG can be exported overseas.
The bottom line is, the more that Texas expands its natural gas infrastructure, the more natural gas it can produce and export.
That’s why Texas is a major player in the drive to promote energy security and independence for the U.S. and its allies.
In fact, the U.S. government is doing everything in its power to secure American energy independence and reliability.
President Biden already has a plan that will cement the U.S. as the king of energy for decades. It will trigger a new phase of the energy boom – and open the floodgates for a handful of tiny, energy stocks.
Trillions of dollars are about to change hands… with over $400 billion up for grabs just in the months ahead.
That’s why on Saturday, July 15 at 10 a.m. ET, I’m hosting a special presentation called Biden’s Stealth Plan. During the event, I’ll explain how you can prepare yourself for this massive energy shift… and get in on triple-digit profits.
To reserve your spot for free, just click here.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins
P.S. The whole world is in dire need of reliable and cheap energy.
And thanks to Biden’s new plan, the U.S. is in a prime position to supply it…
In fact, we’re about to see a “tsunami” that will push billions of dollars into a tiny, energy sector.
A staggering $4.9 trillion is up for grabs… and over $400 billion just in the months ahead.
For more details about how to get in on this massive opportunity, make sure you attend my special presentation on Saturday, July 15 at 10 a.m. ET.
RSVP by clicking here if you haven’t yet. And I’ll see you there.