Just Can't Make No Connection - Bridging Marcellus/Utica Gas Supply with Sabine Pass LNG Exports

Cheniere Energy’s Sabine Pass LNG liquefaction and export facility in Louisiana last week received federal approval to begin operating its fourth 650-MMcf/d liquefaction train, bringing the total export capacity at the terminal to 2.6 Bcf/d. Natural gas supply delivered to the terminal for export has averaged 2.0 Bcf/d in recent months, with flows jumping as high as 2.9 Bcf/d on some days last month as the operator readied Train 4 for operations. There are several supply regions targeting this new demand, including the fastest growing producing region, the Marcellus/Utica Shale in the U.S. Northeast. While there isn’t yet a direct beeline from the Marcellus/Utica to Sabine Pass, there are early indications that recent pipeline takeaway and reversal projects from the producing region and the resulting connectivity are indirectly bridging the divide. In today’s blog, we examine pipeline flow data to understand recent changes in flows and what they can tell us about future flow patterns as export demand continues to grow.

LNG export demand from Cheniere’s Sabine Pass terminal — the first and, for a little while longer, the only export facility in the contiguous U.S. —  has been growing like gangbusters over the past two years. The facility has quickly increased from its first 650-MMcf/d operational liquefaction train starting in early 2016 to now four trains as of last week, in less than two years. The fourth train loaded its first commissioning cargo in August 2017 and just last week received federal approval to begin liquefaction and export activities.

From here on out the construction schedule is expected to slow, with Train 5 not due for completion until August 2019. But emerging export capacity along with the pipeline expansions targeting it already have reconfigured gas flow patterns in the Eastern U.S. One of the biggest and fastest growing beneficiaries of the new demand is expected to be Marcellus/Utica producers. It lies more than 1,000 miles north of Sabine Pass and is connected to the Gulf Coast by pipelines that historically have moved gas north from Texas and the Gulf Coast. But recent developments, including a combination of Marcellus/Utica takeaway pipeline expansions and reversal projects are increasingly connecting the markets.

Tallgrass Energy has added 2.6 Bcf/d of takeaway capacity west out of Ohio on its highly interconnected, cross-country Rockies Express Pipeline (REX) over the past few years (see It’s Been a Long Time Comin’). Energy Transfer Partners (ETP) began operating its new Ohio-to-Midwest Rover Pipeline just last month (see Against All Odds). Both of these pipes cut east and west across numerous legacy north-south long-haul pipelines, like TransCanada’s ANR Pipeline and Columbia Gulf Transmission (CGT), Boardwalk Partners’ Texas Gas Transmission (TGT), ETP’s Panhandle Eastern and Trunkline pipelines, which have been working to reverse northbound capacity with backhaul projects of their own. Closer to the terminal, Williams’ Transco earlier this year put into service its Gulf Trace project, which made flows bidirectional in its Zone 3 segment, from the Texas-Louisiana border to the Louisiana-Mississippi border. So, how can Northeast supply currently get to Sabine Pass? Next, we dive into pipeline flow data from our friends at Genscape to understand those dynamics.

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