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Natural gas prices between $4 and $5/MMBtu will trigger a return to large-scale drilling in U.S....

Natural gas prices between $4 and $5/MMBtu will trigger a return to large-scale drilling in U.S. dry gas sites, Platts writes, quoting execs at its Appalachian Gas Conference. The exception would be the Marcellus Shale region, where up to $3B of new pipelines could unlock the equivalent of 5% of daily U.S. natural gas supply in the last months of this year and in 2013.
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Comments (11)
  • Dana Blankenhorn
    , contributor
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    How about we stop flaring the Bakken first? Won't that cost a bit less than $3/mcf?
    16 Oct 2012, 12:56 PM Reply Like
  • Mike Maher
    , contributor
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    Oneok's gathering system should be online by the end of Q1, if I remember the presentation I saw correctly. I think the ceiling on nat gas prices are going to be in the $4 - $4.50 range for the foreseeable future, and that prices are seeing up for another leg down as Bakken gathering systems and Marcellus processing plants come online between now and early next year.
    16 Oct 2012, 03:39 PM Reply Like
  • Dana Blankenhorn
    , contributor
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    That's what I think. Which is why new sources of demand are as vital as new sources of supply. And it's not all about drill, baby, drill. It's also about gather, baby, gather.
    16 Oct 2012, 04:05 PM Reply Like
  • Mike Maher
    , contributor
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    Demand is going to lag the supply growth for a long time. Even with the export facilities coming online in a few years, the amount of investment in new pipes, plants, and infrastructure to burn all this gas is going to take years to build. A switch to transportation for some of the big trucking firms would help, but I'm not even sure the engine makers could make enough engines each year to really move the needle.
    16 Oct 2012, 04:20 PM Reply Like
  • kmi
    , contributor
    Comments (4525) | Send Message
     
    Mike Maher,

     

    the demand exists already in New England but the pipes aren't there. There's a number of articles discussing the issue.

     

    (SE) is looking to expand its access to Marcellus product, and I believe there are two pipeline expansions scheduled to connect NY and New England already on the books.
    16 Oct 2012, 05:27 PM Reply Like
  • Mike Maher
    , contributor
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    Right, Spectra's NJ-NY expansion into NYC is 800 Mmcf/day and is set to open early next year. Spectra's AIM project has no size given yet, but is scheduled for November 2016. That article is talking about another $1.8 bcf/day online by the end of 2012, and 3.4 bcf/day in 2013, only from the Marcellus. That means there will be a further supply glut as the new pipes needed to bring the gas to New England are built over the next 4 years.

     

    http://bit.ly/TtUq2b
    16 Oct 2012, 06:08 PM Reply Like
  • kmi
    , contributor
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    I stand corrected haha
    16 Oct 2012, 07:22 PM Reply Like
  • Mike Maher
    , contributor
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    Haha I'm looking at buying Spectra because of those pipelines around the Marcellus, so I've been reading through all their presentations over the last few years. I also live in NJ and do a lot of work in NYC, so that NJ-NY expansion was in the news a lot for a little while here. The pipelines are slow to go into the ground, but offer nice, stable returns over many, many years. The problem is that it takes only a few months to drill a well and bring a new natural gas well online, but years to get the approvals to build pipelines to new regions on the US, export facilities, or new chemical plants. The power generation market is under pressure due to declining electricity demand, although there are both conversions to nat gas and new nat gas plants popping up. Still, even with prices down here, supply could easily expand 10% by this time next year. Its bad news for drillers, but good news for consumers, businesses that use nat gas, and the companies that transport gas. SE should split the company into US and Canadian assets, convert the US assets into an MLP, and reap the benefits of that structure, IMO.
    16 Oct 2012, 07:42 PM Reply Like
  • Hendershott
    , contributor
    Comments (1618) | Send Message
     
    Pipes, intrastate, oil and gas. pipe baby pipe!
    16 Oct 2012, 04:08 PM Reply Like
  • Christopher Wallace
    , contributor
    Comments (1206) | Send Message
     
    The 5% of potential new gas supply to come out of new Marcellus infrastructure, how much of that is NGLs vs. dry gas?
    16 Oct 2012, 06:03 PM Reply Like
  • Gigem77
    , contributor
    Comments (1484) | Send Message
     
    More on the Marcellus/Utica pipelines http://bit.ly/R48Ed8 The author writes frequently on this and related subjects.
    17 Oct 2012, 06:43 AM Reply Like
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