Adapting to Marcellus



Author: Velocity Suite Natural Gas Analyst

2013 has been a very exciting year for the Natural Gas industry! Advances in drilling technologies and a continual streamlining of the extraction process have provided a glut of natural gas throughout the contiguous United States. The US dependence on imports of oil and natural gas has been tempered by surging production rates and booming domestic supply. Nowhere has this boom in supply been more apparent than in the Appalachian Basin’s Marcellus Shale play. Scheduled gas quantities pulled from the EV Fuels Operationally Available Capacity Dataset indicate production in the Marcellus has increased from less than 2 Bcf/d in 2008 to a whopping 11 Bcf/d in 2013, accounting for an estimated 18% of total US production in December. Such rapid increase in output has caused a scramble among gas suppliers to develop the infrastructure needed for handling surplus volumes.
Marcellus 08-13 Production2
Traditionally, the high-volume production areas for natural gas have been located in the southeastern US in states like Texas and offshore Louisiana, where gas is then processed and transported northeast via long-haul pipelines (i.e. Columbia Gulf Transmission, Tennessee Gas Pipeline, Texas Eastern Transmission, Transcontinental Pipeline; depicted below using the EV Energy Map).

Big Four Long-Haul2

However, with the Marcellus’ post-2008 surge in production, Northeast demand for Gulf-supplied natural gas has dwindled, upsetting the status quo of a south-to-north, west-to-east gas flow. With substantial growth forecasted for both the Marcellus and Utica shale plays, the Northeast is on the cusp of transitioning from a demand region to that of a net supplier. Increased demand from the Southeast in the coming years is predicted to cause a reversal in traditional flow patterns for natural gas across the US. Large-scale retrofit projects such as the Columbia Gulf West Side Expansion and TETCO TEAM South Expansion have already been proposed to accommodate future need. These projects provide a looping of existing pipeline systems to allow for gas flow in the opposite direction, which will be necessary for transport of gas from the Marcellus to other demand regions in the US and Canada.

Industry trends will only continue to evolve as a result of development within the Marcellus Shale play through enhanced drilling techniques and improved pipeline infrastructure. For everyone involved, these factors will make for a very dynamic and exhilarating 2014!

Sources:

EIA – Today in Energy – 12/9/2013 >>
EIA – Today in Energy – 11/19/2013 >>
Columbia Pipeline Group – Westside Expansion Project >>
Spectra Energy – Texas Eastern Appalachia to Market Expansion 2014 >>

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