Dominion Transmission

The NYMEX gas futures curve for 2015 was sitting right at $3.00/MMBtu yesterday (January 27, 2015) as colder weather has halted it’s recent slide. This still puts outright prices in the Northeast gas forward curve in dangerous territory for producers – very close to breakeven levels – through 2015 and not much higher even beyond this year. With NGL prices no longer supporting drilling activity for many producers in the region, the gas forwards market is becoming a bigger factor in signaling producers’ drilling prospects. Today in Part 3 of our Forward Curve Series, we continue our look at Northeast forward curves, with a focus on the Dominion South Point price hub, its historical shape and the fundamentals behind where it stands now.

For gas producers in Appalachia, this has not been such a good summer for basis – the price they get for their gas versus the benchmark at Henry Hub, LA.  Basis in the eastern part of the Marcellus has been particularly weak, with negative differentials extending into New York.   Even at some West Virginia points like Dominion South, producers have faced ugly basis for the past few months.  But there are some points that have been relatively immune, including Columbia Gas TCO, which has been hanging in there at pricing pretty close to Henry.  Even when parts of the Dominion South and TCO pipeline systems are on top of each other.  Why are basis differentials in the Appalachian Mountains hopping around all over the place?  Today we look into why some Northeast prices have taken a hit and others have not.

<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>