gas pipeline constraints

The U.S. natural gas market tightened considerably in 2016, with a pull-back in production volumes leaving total gas supply, including imports, within a hair’s breadth of total demand (including exports) on an annual average basis. In 2017, however, gas production has climbed again. And it’s not just from the Marcellus/Utica, which grew through even the downturn over the past few years, but also from other basins, particularly ones focused on crude oil. Current production economics and drilling activity suggest continued growth over at least the next five years. Could it be too much? Will demand expand fast enough and will all the growing supply regions be able to access that demand? Or, are producers headed for another contraction before they’re barely out of the last one? In today’s blog, we begin a series unpacking RBN’s five-year natural gas supply-demand outlook.

With the start-up of new capacity on Energy Transfer Partners’ Rover Pipeline out of the Southwest Marcellus and Utica now a reality and the service on several other pipeline expansions out of the Northeast expected to begin soon, some of the questions that have been vexing the market for years are about to be answered. Principal among these: How much will natural gas production in the region grow and how fast? How will Northeast supply growth affect the larger U.S. market? And how will supply growth across the country compare with increasing demand? (Hint: the numbers could be staggering, the impact will be too, and there could be a big supply/demand disconnect.) Today we examine how a prospectively huge supply/demand imbalance in the U.S. natural gas market might be rectified.