Bob Bookstaber

Over the past two years, natural gas production from the Appalachian region has soared with growth in the Marcellus pushing total production beyond 10.5 Bcf/d.  Just next door the Utica Shale is coming into focus with attractive economics due to the natural gas liquids, crude oil and condensate production.  The looming question is natural gas takeaway capacity.  With Marcellus production continuing to grow and Utica supplies coming on, production in the Northeast will soon exceed regional consumption and will need to be moved out of the region to other markets in the U.S. and Canada.  To accomplish this, new pipelines have been proposed and reversals of existing infrastructure that was originally built to transport gas into the region are being implemented. Today we review another of the proposed projects.

Growth in natural gas demand forecasts these days rely heavily on projections of increased power burn. Lack of coordination between the gas and electric industries threatens to limit that expansion. The greatest challenge is the security of gas supply to the generators and how that impacts reliability. Regional differences in the electric power market appear to make national regulations to secure gas supplies unworkable. Today we review FERC efforts to understand and perhaps attempt to standardize those regional differences.

During 2012 the FERC jumped into the ring to involve itself in the long running debate to improve coordination between the gas and electric power industries. The FERC is motivated by concerns about reliability and the trend to increase power generation from natural gas at the expense of coal and oil. The commission held 5 regional conferences to identify the industry’s concerns and the role of regulation in any solutions. Today we examine progress on this important initiative.

The generation of power from natural gas will be the most important growth sector for the gas industry for the foreseeable future – certainly for producers, but also for the pipelines that provide the transportation service to deliver the gas to power generators. Handling the infrastructure and service challenges that come with increased power burn is therefore a priority. This is true for the nation as a whole, but was specifically raised this year by the Midwest Independent System Operator (MISO) in the heart of coal country - where coal-to-gas switching was most significant during 2012. We covered the MISO reports detailing their infrastructure concerns previously (see Hooking Up the Next Generation). This blog post is a review of challenges that the industry must address on both the regional and national level.

<p>Northeast regional natural gas supply and distribution companies are taking advantage of the opportunities that abundant local production from the Marcellus and Utica shale brings them.</p>