Natural Gas

In the News:

Appalachian Basin infrastructure growth will make Marcellus/Utica gas available to broader market

Dry natural gas production for the Lower 48 states hit record levels this winter and has averaged 72 billion cubic feet per day (Bcf/d) so far in March, with production from shale plays, or regions, accounting for more than 50% of the total. The Appalachian Basin, with production centered in the Marcellus and Utica plays, has the highest growth rate for dry natural gas production. Marcellus production increased dramatically over the past five years from 1.3 Bcf/d in 2010 to its February, 2015 level of 14.6 Bcf/d. The Utica play has also seen rapid increases in production, particularly over the past two years, though not at the rates found in Marcellus, and is currently producing just under 2 Bcf/d.

Since the beginning of March, several pipelines have reached milestones in their projects designed to move more natural gas out of the Marcellus into market areas. These include:

Algonquin Incremental Market (AIM) project: On March 3, the Federal Energy Regulatory Commission (FERC) issued a certificate of public convenience and necessity for the pipeline project, which authorizes Algonquin to construct and operate the project's facilities in accordance with the conditions set forth by FERC. The AIM project will expand the capacity on Algonquin's pipeline that runs from New York through Massachusetts by 342 million cubic feet per day (MMcf/d), or 13.2%. The expanded capacity will come from both new pipeline and compressors, as well as modifications at an existing compressor station. The scheduled project completion date is November 2016.

Texas Eastern Transmission's Gulf Markets Expansion project: On March 4, FERC issued a notice that in late February Texas Eastern filed a certificate to construct and operate this project to provide 650 MMcf/d of increased capacity (up 7.7%) from the Marcellus and Utica basins to the Gulf Coast region of Louisiana and Texas, as well as bidirectional flow on the Texas Eastern system. Expanded capacity for this project will come from modifications to existing compressor/metering stations and new compressor and facility installation. The scheduled project completion dates for phases one and two of this project are November 2016 and August 2017.

Other projects, currently in the FERC prefiling phase, are targeted for later start dates:

PennEast Pipeline Project: In October 2014 FERC approved this project's prefiling request for the construction of a 100-mile pipeline, from Luzerne County, in northeastern Pennsylvania, to Transco's Trenton-Woodbury interconnection in New Jersey, which will transport up to 1 Bcf/d of natural gas. The pipeline project is slated to come online in 2017.

Atlantic Sunrise Project: This project, which has been in the prefiling process since spring 2014, is intended to add 1.7 Bcf/d of new capacity to the Transcontinental pipeline. This 178-mile project will link the Marcellus producing region to the Transco mainline, feeding several locations along the Atlantic Coast from Pennsylvania to South Carolina. Anticipated in-service is summer, 2017.

Atlantic Coast Pipeline (ACP): This pipeline would originate in West Virginia, run to Greensville County, Va., and then south into eastern North Carolina. While the prefiling process started in October of 2014, construction is planned to start in 2016, with an in-service date in late 2018. The pipe would be 550 miles long and have a capacity of 1.5 Bcf/d.

These projects are in addition to several pipeline expansion and reversal projects that have recently come online to move gas out of the Appalachian region, totaling 1.9 Bcf/d of added capacity since September 2014. The largest of the projects was the Texas Eastern Appalachia to Market (Team) 2014 Project, which entered service in November and has added 600 MMcf/d of capacity from the Marcellus Shale region in western Pennsylvania and West Virginia to markets in the Northeast, Midwest, Southeast, and Gulf Coast.

The natural gas pipeline industry is trying to reach a broader range of markets and be more flexible than in the past. Pipeline systems, particularly compressor stations, are being modified to allow bidirectional flow that will allow pipelines that were built and used to move gas into the Northeast to also take gas out of the Northeast. Additionally, partnerships are being established between pipeline companies and power generation organizations, like Duke Energy (Atlantic Coast Pipeline) and Northeast Utilities (Spectra Energy/Algonquin Incremental Market, or AIM) to support additional pipeline projects that will move gas from the Appalachian Basin to supply natural gas-fired power generation. Finally, direct investment projects to build new pipelines are being proposed as well.

More than 16 Bcf/d of brownfield expansions and flow reversals make up most of the proposed increases to Marcellus and Utica takeaway capacity through 2016, followed by greenfield projects that, if developed, represent more than 10 Bcf/d in increased takeaway capacity to come online in 2017-18.