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First Look - Northern Natural Gas to expand Permian pipeline capacity

WTI is trading slightly lower, reversing some gains from yesterday
- Qatar says Israel and Hamas are nearing a ceasefire agreement
- Buyers in China and India have been purchasing more crude cargoes in advance of stronger US sanctions
Russian crude shipments hold steady (BBG)
- Russia’s seaborne crude shipments were stable in advance of new US sanctions, which are the most aggressive since sanctions began in 2022
- Flows could be impacted soon, with 160 tankers having been added to the US sanctions list
- About three-quarters of Russia’s ESPO cargoes shipped since October were carried on vessels that are now sanctioned
- The majority of Russia’s crude exports go to Asia; however, Asian buyers have become warier about purchasing sanctioned crude in recent weeks

Natural gas prices moved lower overnight, trading down 18c to $3.75 (7:37 CT) on Tuesday morning
- The American and Euro weather model diverged over the past 24-hours
  - The European showed a 18.8 HDD 24-hour loss while the American ensemble is now 11 HDDs colder than the Euro over the 15-day forecast period (CWG)
- The volatility in models and uncertainty around the degree of cold is weighing on the gas curve this morning
Northern Natural Gas Expands Permian Basin Capacity (S&P)
- Capacity Expansion: Northern Natural Gas plans to add 87,000 Dth/d of winter peak day firm transportation capacity with the new Tarzan compressor station in Andrews County, Texas, targeted for service by November 1, 2025.
- FERC Approval Process: The project, submitted under FERC’s prior notice procedures, will proceed if no protests are filed within 60 days of public notice publication.
- Market Context: While the 2024 startup of the Matterhorn pipeline improved Permian egress, growing production is causing forward Waha-Henry Hub discounts to exceed $2/MMBtu for summer 2025 and 2026.
- Future Relief: Additional capacity expansions, including Gulf Coast Express, Blackcomb, and Hugh Brinson Pipeline, are expected to come online in 2026, narrowing basis differentials by 2027.