Texas oil producers have a natural gas problem. As NG prices in West Texas have literally dropped as low as negative 25 cents per million btu (meaning, producers had to pay to transport it off site) in recent months, some companies are now turning to what amounts to repurposing it.
As flaring practices have been widely criticized by environmental groups and government alike, petroleum producers are capturing natural gas that is produced during oil pumping operations. That gas has become a burden due to its massive abundance. With other regions producing natural gas nearer pipelines, the cost to ship NG from West Texas combined with its low asking price has led to the gas becoming virtually worthless. It essentially has nowhere to go, but down.
According to a Bloomberg report, EOG Resources and as many as four other companies are engaged in a process where they pressurize their excess NG and launch it into past-their-prime oil wells.
In addition to essentially ridding themselves of this excess NG, the process serves to increase oil output in those wells. Gas injection is not new to enhanced oil recovery (EOR) as it accounts for 60% of EOR techniques in using NG, CO2, and Nitrogen. But EOG has reported that using NG increases production rates by as much as 70% (30%-70% range) whereas typical gas injection methods have yielded at most, 60% (20% to 60% range). Additionally, it is believed that those wells production lives may be extended by as many as two years.
Regardless, the glut continues. Reuters reported that Apache Corp has stopped NG production at its Permian based asset Alpine High altogether. Though NG prices coming out of the Permian are back in the black, they are still only fetching a paupers price. New NG pipelines are due to come online in late 2019, but as oil output is expected to continue to climb in the Permian, so will a lot of unwanted natural gas.