Apache Halted Permian Gas Production in March Due to Bottlenecks

Oil and gas producer Apache said it temporarily halted production at its Alpine High assets in the Permian basin in late March, curtailing output of about 250 MMcf/d because of extremely low prices.

Oil and gas pipeline construction in the Permian has not kept up with output, which has more than doubled over the past three years, making the country the world’s largest oil producer.

Several new pipelines are in the works, but none are expected to enter service before late 2019. The Gulf Coast Express pipeline and the Permian Highway – designed to transport up to 2 Bcf/d – are scheduled to begin operations in October and later in 2020, respectively.

“We anticipate relatively wide and volatile natural gas price differentials in the Permian Basin until the Gulf Coast Express pipeline enters service,” CEO John Christmann said.

The Houston-based company has been slowing its activity in the Permian and shifting focus to oil-rich assets. It has also hedged a large portion of its expected Permian production through the middle of this year to address the pricing risk.

The latest production delay will have minimal effect to oil production at Alpine High, none to its oil guidance and boost its near-term cash flow, Apache said. It reiterated its guidance to produce 100,000 boe/d from the Alpine High assets by 2019 end.

The company also said it expects no change to full year core earnings guidance for Altus Midstream Co, a pipeline company majority owned by Apache. In fact, Altus’ natural gas processing plants at Alpine High were proceeding ahead of schedule, it added.