I Walk The Line: The New Appalachian Gas Producer Playbook In A Pipeline Constrained World

In the last decade, Appalachian natural gas production rocketed up to more than 35 Bcf/d, often straining infrastructure and crushing local price basis. With the outlook bleak for new pipeline projects beyond Mountain Valley Pipeline, producers and marketers are adapting to a new normal characterized by no new growth in egress capacity and wide swings in seasonal gas demand.

As a result, the big producers including EQT, Antero, and Southwestern to name a few, have gotten smarter about how they time their production. After 2020, we learned that producers could ratchet back production on a massive scale given a price jolt and now producers are becoming sophisticated in tweaking production when needed. They’ve learned the cadence of drilling and building inventory when local demand is low and then turning their wells in line to produce when demand is high. In other words, they’ll “walk the line” of matching production with local demand and firm capacity.  That’s a major change from when Appalachian producers would shoot themselves in the foot by outstripping local demand and egress and crushing regional price basis. What it means is that we could see fewer basis blowouts as production becomes more seasonal.

In this webcast, David Braziel walks through the latest trends in Appalachia production, weighs supply against demand, gives our latest expectations for regional infrastructure (including Mountain Valley Pipeline) and ultimately arrives at a basis and outright price forecast for Eastern Gas South.