Northeast production growth, the primary driver of overall gains in U.S. natural gas output in recent years, has largely stalled in 2016. Rig counts in the Marcellus/Utica dropped to near six-year lows, and the region has been facing constraints—from takeaway capacity and in the past month or two from storage injection capacity. But market factors are again about to roil the Northeast: 1) winter heating demand is on its way, and 2) more takeaway capacity has come online in the past month and still more is coming before the year is up. Today, we review recent Northeast natural gas production trends using pipeline flow data from Genscape and assess factors that will impact regional production this winter.
Since 2010, by far the most significant growth in U.S. natural gas production has occurred in the Northeast, where the Marcellus/Utica shale plays in Pennsylvania, West Virginia and Ohio have proven to be among the most productive in the world. To put that into perspective, while production from the rest of the U.S. has declined by nearly 7 Bcf/d over the last five years, Northeast production has climbed at an astounding pace, from less than 5 Bcf/d in 2011 to a record 22.8 Bcf/d in February 2016. Since February, volumes have bounced around but overall growth has flattened. With winter now just around the corner and pipeline expansions coming online, it’s time to revisit what’s happened with Northeast production this year and consider the prospects for supply growth in the coming months.
The RBN NATGAS Haynesville is a weekly natural gas fundamentals analysis focused on supply, flow, and LNG-driven demand dynamics within the Haynesville basin.
At RBN, one way we track Northeast production is using daily natural gas pipeline flow data from our friends at Genscape. If you’ll recall from our prior blogs on the subject (Sooner or Later), pipeline flow data is a collection of daily gas volumes nominated by market participants to either be received from or delivered into natural gas interstate pipelines (pipes that cross state lines) at thousands of individual meters across the U.S. Aggregated by facility type, these flows provide critical insights into supply and demand trends on a nearly real‑time (daily) basis. For today’s analysis specifically, we used Genscape’s NatGas Analyst tool to query for pipeline flows from production receipt meters (i.e., gathering systems, processing plants) located in the three Northeast states where the majority of activity and supply growth has been in recent years: Pennsylvania, West Virginia and Ohio. Figure 1 shows the resulting daily volumes for total production receipts from the three states combined by year since 2009 (when the Shale Revolution hit the Northeast).
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About the song
“Still They Ride” is the fourth Billboard Hot 100 single (#19) from Journey’s seventh studio album Escape, which was released on July 31, 1981. According to the liner notes of Journey's Time3 compilation, this song is a vignette from lead singer Steve Perry's youth, the same Central Valley scene that inspired another San Joaquin Valley escapee, George Lucas, to make the film “American Graffiti.”
