El Paso Natural Gas lifts force majeure on gas pipeline.

El Paso Natural Gas lifts force majeure on gas pipeline.

El Paso Natural Gas (EPNG) has lifted the force majeure declaration on its gas pipeline, signaling a return to normal operations after a period of geopolitical uncertainty. The decision comes amidst rising natural gas prices and increased demand in North America, driven by a heat wave and robust Mexican imports.

Since the war between Israel and Iran began on June 13, natural gas prices in North America have surged. The July New York Mercantile Exchange gas contract, for instance, gained about 50 cents this week and was trading above $4.00/MMBtu on Friday morning [1]. Mexico's imports of natural gas via pipeline from the United States have remained robust, averaging 7.5 Bcf/d over the past 30 days, a 400 MMcf/d increase from the same period last year [1].

The force majeure declaration by EPNG was likely a precautionary measure in response to potential disruptions in global LNG markets due to the conflict. However, with the situation stabilizing and the pipeline resuming operations, EPNG has signaled confidence in the market's resilience. This move is significant for the natural gas sector, as it indicates that the market is returning to normalcy despite ongoing geopolitical tensions.

Granite Ridge Resources (NYSE:GRNT), another player in the natural gas sector, has also seen strong performance. The company reported a 5% increase in production from Q4 2024 to Q1 2025, driven by natural gas outperformance. This has led to a significant improvement in its projected free cash flow for 2025, from $26 million to $32 million after dividends [2].

In conclusion, the lifting of the force majeure declaration by El Paso Natural Gas is a positive sign for the natural gas market. It indicates that the market is adapting to the current geopolitical environment and is poised for continued growth. As the market stabilizes, investors can expect to see further improvements in natural gas prices and increased production from companies like Granite Ridge Resources.

References:
[1] https://naturalgasintel.com/news/mexico-eyes-canada-as-backup-natural-gas-supplier-amid-heavy-us-imports-geopolitical-jitters-spotlight/
[2] https://seekingalpha.com/article/4795874-granite-ridge-resources-strong-natural-gas-performance-to-start-2025