NG producers boost output ahead of expansions | BRYYY Message Board Posts

Berry Political Board

BRYYY   /  Message Board  /  Read Message



Rec'd By
Authored By
Minimum Recs
Previous Message  Next Message   Post Message   Post a Reply return to message boardtop of board
Msg  224165 of 516937  at  8/31/2016 2:46:07 AM  by


NG producers boost output ahead of expansions


US gas producers boost output ahead of expansions

29 Aug 2016, 7.09 pm GMT

Houston, 29 August (Argus) — Independent natural gas producers in the Appalachian shale are looking to new pipeline projects to provide crucial takeaway capacity for their rising output.

After falling to 17-year lows in March, Nymex prompt month gas prices hit a 13-month high early last month driven primarily by summertime cooling demand. Gas-focused independents including Range Resources, EQT and Cabot Oil & Gas are stepping up their activity in response to the higher values.

But takeaway capacity from the prolific Marcellus shale and the fast-growing Utica shale in Appalachia is already constrained, keeping prices there much lower than in the US' main producing region, the Gulf coast. Spot natural gas prices at Tennessee Gas pipeline zone 4 Marcellus have averaged a $1.51/mmBtu discount to the Henry Hub so far this month.

A few producers have contracts with new pipeline capacity scheduled to come on line either later this year or in 2017, and are coordinating their increases in drilling activity to dovetail with those projects.

With producer well backlogs dwindling and about 5 Bcf/d (142mn m³/d) of new pipeline takeaway capacity scheduled to come on line through the end of next year, "we expect producers will need to begin ramping up Marcellus drilling or Utica drilling within the next few months to meet their pipeline obligations," said BTU Analytics analyst Marissa Anderson.

In the Marcellus and Utica it takes about six months after the start of drilling a well for producers to get the output to market, BTU Analytics estimates.

"For any wells drilled today, we likely will not see an impact to production from that well until early next year," Anderson said.

Range Resources plans to drill a seven-well pad in the Appalachian shale region this year, and could quickly drill up to 42 more laterals. The producer is expecting the 628mn cf/d (18mn m³/d) Spectra Gulf Markets project to facilitate some of its increased output when it begins flowing in the fourth quarter.

EQT's Ohio Valley Connector project, also expected in service in the fourth quarter, will add 600mn cf/d of takeaway. EQT is planning to drill 30 wells in the Marcellus this year, and is looking forward to not only its own project but the Gulf Markets project as well to improve its takeaway options. EQT has contracted for 100mn cf/d of capacity on Gulf Markets.

Not all producers will ramp up their output this year. Antero Resources is waiting on the 3.25 Bcf/d Energy Transfer Rover pipeline to come on line in the second half of 2017 before it increases drilling activity. The producer said it has already maxed out its Rockies Express pipeline capacity at 600mn cf/d in the Utica shale.

Northern Fuel Gas last month said it was waiting on its own 475mn cf/d Northern Access to come on line in the second half of 2017 before it raises its production levels.

Cabot Oil & Gas has contracted for 150mn cf/d of takeaway on Spectra Energy's 1 Bcf/d PennEast pipeline, which has been delayed from its original start-up date of late 2017 to the second half of 2018 but did receive a draft environmental impact statement from the US Federal Energy Regulatory Commission last month. It also has a contract with Transcontinental Gas pipeline's 1.7 Bcf/d Atlantic Sunrise project, expected to come on line in the second half of 2017.

But producers are likely wary of the feasibility of pipeline projects, as some similar expansions in the region have met with headwinds in recent months. Kinder Morgan cancelled its 1.3 Bcf/d Northeast Energy Direct pipeline because it did not receive enough contracts to make it financially viable. The 628mn cf/d Constitution pipeline has been delayed after the state of New York denied it a key permit.

And Spectra's 900mn cf/d Access Northeast pipeline received a setback earlier this month when a top Massachusetts court ruled that utility companies cannot use ratepayers to finance gas pipeline construction. Following the ruling, utilities Eversource and National Grid last week withdrew petitions with the state of Massachusetts for the approval of the companies' contracts with the project.

The uncertainty of pipeline expansions in the region could be a driver for some producers seeking additional methods to get their gas to a market. Despite having contracts with multiple pipeline expansions, Cabot recently became the exclusive provider of natural gas to two power plants, linking its production directly to the plants via its own gathering system. The unique arrangement means there is no need for long-term transportation, and Cabot will provide more than 400mn cf/d for the projects.

Cabot's senior vice president of marketing Jeffrey Hutton said last month that the company is still confident that the Constitution pipeline will be constructed, but "even without those volumes we still have direct line of sight to produce over 3.5 Bcf/d by the end of 2018," effectively doubling its production rate.

     e-mail to a friend      printer-friendly     add to library      
| More
Recs: 3     Views: 536
Previous Message  Next Message   Post Message   Post a Reply return to message boardtop of board
About Us  •  Contact Us  •  Follow Us on Twitter  •  Members Directory  •  Help Center  •  Advertise
Not a member yet? What are you waiting for? Create Account
Want to contribute? Support InvestorVillage by donating
© 2003-2019 All rights reserved. User Agreement
Financial Market Data provided by