Gulf South

Demand for U.S. natural gas exports via Texas is set to increase by close to 6 Bcf/d over the next few years.  At the same time, Texas production has declined more than 3.0 Bcf/d (16%) to less than 17 Bcf/d in the first half of November from a peak of over 20 Bcf/d in December 2014, and any upside from current levels is likely to be far outpaced by that export demand growth. Much of the supply for export demand from Texas will need to come from outside the state, the most likely source being the only still-growing supply regions—the Marcellus/Utica shales in the U.S. Northeast. Perryville Hub in northeastern Louisiana will be a key waystation for southbound flows from the Marcellus/Utica to target these export markets along the Louisiana and Texas Gulf Coast, particularly given the hub’s connectivity and prime location. Today, we look at the pipeline expansion projects into Perryville that will make this flow reversal possible.

Natural gas pipeline takeaway projects under development out of the U.S. Northeast would enable ~10 Bcf/d to flow south from the Marcellus/Utica supply area. About half of that southbound capacity is geared to serve growing power generation demand directly south and east via the Mid-Atlantic states. But another nearly 5.0 Bcf/d is headed southwest to the Louisiana and Texas Gulf Coast for growing LNG export and Mexico demand—and that is on top of about 4.4 Bcf/d of reversal (or backhaul) capacity already added over the past two years. Much of the Gulf Coast-bound backhaul capacity will converge on the Perryville Hub, a market center located in northeastern Louisiana, about 220 miles north of the U.S. national benchmark Henry Hub. As such, the ability for gas to move through Perryville and get to downstream demand market centers will be key to balancing the natural gas markets. Today, we take a closer look at the historical and future pipeline capacity in and around the Perryville Hub.

A total of 13 U.S. liquefaction trains with a combined capacity of about 58 MTPA (~8 Bcf/d) are either in early stages of operation along the Gulf Coast or under construction and scheduled to be online by the end of 2019. Of that, about 3.2 Bcf/d is being developed along the Texas Gulf Coast. Beyond that, a “second wave” of liquefaction projects is lining up, with as much as an additional 11 Bcf/d of capacity proposed for Texas by the early 2020s. While many of these second-wave projects may not get built, those that do will require the construction or rejigging of hundreds of miles of pipelines, particularly along that Gulf Coast corridor. Several of the first and second wave liquefaction projects have proposed to build laterals that connect to and branch out from nearby long-haul pipelines, creating new Gulf Coast-bound delivery points for Eagle Ford shale gas as well for supply that will eventually move south from supply basins as far north as the Marcellus and Utica shales. Today, we take a closer look at these liquefaction-related pipeline projects and how they will connect to and impact the existing pipeline network.