Appalachian drillers expect 2016's NGL revenue spike to be just the beginning

April 7, 2017 – SNL Energy

Appalachian drillers expect 2016's NGL revenue spike to be just the beginning

By: Bill Holland

Big independent Appalachian shale producers posted substantial increases in their natural gas liquids revenue in 2016 and are looking at further gains in 2017 and 2018 as oil-linked NGL prices continue to improve and new midstream projects knit the Utica and Marcellus shales into U.S. and international markets…

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…In Appalachia, Range led the way for exports to Europe, becoming an anchor shipper on the Mariner East 1 pipeline to the Marcus Hook export terminal outside Philadelphia for onward shipment to European chemical and plastics factories.

"The terminal has been a factor in the Marcellus/Utica [NGL] market for the past two years or so, but nothing like what is on the horizon," RBN Energy analyst Ron Gist said in an April 2 research note. "The company currently is building the 275 Mbbl/d Mariner East 2 pipeline (from Scio, Ohio to Houston, Pa. and from there to Marcus Hook) that is expected to come online as soon as the third quarter of this year. Mariner East 2 itself is expandable to 450 Mb/d, and Sunoco Logistics has indicated that it may install a parallel pipe (dubbed Mariner East 2X) capable of transporting another 250 Mbbl/d, bringing the total potential of the Mariner East system to a whopping 770 Mbbl/d."

With 100% of Antero's dry gas production hedged at $3.63 for 2017, gas liquids represent the biggest potential upside to the company. After increasing NGL revenues 64% in 2016, Antero is telling analysts it will grow that production segment 65% in 2017 and an additional 59% in 2018, to just over $1.1 billion.