gas-on-gas-competition

With natural gas production growth outpacing gas-demand growth in both the U.S. and Canada, gas producers in both countries are engaged in an increasingly fierce and costly fight for market share. Until recently, there were only skirmishes. For instance, when burgeoning Marcellus/Utica shale gas supplies lowered Northeast destination prices, TransCanada cut transportation rates on its mainline to help Western Canadian suppliers compete. When Northeast supply eventually exceeded Northeast demand on an annual basis, Canadian producers and shippers redirected more gas exports to the Midwest and West markets. But now, supply congestion on both sides of the U.S.-Canada border is worsening in every border region, to the point where options to maneuver into alternative markets are shrinking. This is war, folks — competition for U.S. gas market share between Canadian and U.S. producers is about to get much stiffer and the price discounts much deeper — deep enough to eventually price some production basins out of the market. Today, we discuss highlights from RBN’s new Drill Down Report on the subject.