Spectra Energy

We talk a lot here in the RBN blogosphere about the bearish market effects of the Shale Revolution, and frequently highlight the U.S. Northeast natural gas region — rapidly growing gas production from the Marcellus/Utica; oversupplied, trapped-gas conditions; and resulting regional price discounts. These dynamics are driving massive investments in pipeline reversals, expansions and new capacity to move the gas to market. Northeast producers are counting on that increase in takeaway capacity to relieve price pressure and balance the market.  But all this gas moving out of the region needs a home.  Fortunately, new demand is emerging, from exports (to Mexico and overseas LNG) and into the U.S. power sector.  One of the big growth regions is the U.S. Southeast, where power utilities are investing heavily in building out their fleet of gas-fired generation plants and are banking on this new, unfettered access to cheap Marcellus/Utica gas supply. Today’s blog provides an update on power generation projects coming up in the southern half of the Eastern Seaboard, based on a recent report by our good friends at Natural Gas Intelligence — “Southern Exposure: Gas-Fired Generators Rising in the Southeast; But Will Northeast Gas Show Up?”

General Partners Phillips 66 and Spectra Energy control midstream Master Limited Partnership (MLP) DCP Midstream Partners (DPM). The partnership owns midstream transportation and processing assets along the natural gas and natural gas liquids (NGL) supply chain. Similar to many MLPs its Limited Partner unit price has declined by more than 50% in the past year. Despite exposure to difficult market conditions in the Eagle Ford and East Texas, a strong performance from the NGL logistics segment is expected to propel a 20% gain in net income between 2015 and 2017. Today we review our latest spotlight analysis report on DPM.

Crude production in the Niobrara shale formation is focused on two areas, the Denver-Julesburg (DJ) Basin in Northeast Colorado and the Powder River Basin (PRB) in Wyoming. Production has expanded in both basins (current output is about 435 Mb/d according to the Energy Information Administration) but much of the recent volume growth has come from the DJ basin. Expectations as recently as last year that production would expand to over 700 Mb/d in the next 4 years have been tempered by the crude price crash. A couple of large pipeline projects prompted last year by those production expectations have been cancelled since but others are still being built. Today we assess crude takeaway infrastructure in the DJ basin.

Producers in the Marcellus and Utica shale plays could be moving a lot more natural gas into New England, if only there was enough pipeline capacity to get it there. An increasingly gas-hungry neighbor to the nation’s most prolific production area, New England has added precious little capacity to transport gas, and the fates of game-changing pipeline projects that have been proposed hang in the balance. The region’s unique gas-delivery challenges, their market impacts and possible solutions are the subject of RBN Energy’s newly released Drill Down report, “Please Come To Boston—New England’s Ongoing Gas-Supply Dilemma”. Today, we provide a preview, and highlight some of the report’s findings.

It remains to be seen to what extent the recent crash in oil prices--and the sympathetic decline in prices for natural gas liquids (NGLs) - will lead to major drilling and production pull-backs in some U.S. shale plays. What seems clear, though, is that the higher-grade, liquids-rich areas at the heart of the Eagle Ford and Permian Basin will continue to experience at least modest levels of drilling activity and still-strong production for some time to come.   That should provide considerable relief to the midstream companies that have been investing heavily in NGL infrastructure in the Eagle Ford and Permian the past few years. Today, we continue our company-by-company look at existing and planned natural gas processing plants, fractionators and NGL pipelines in two of the most productive plays in the U.S.

Developing new natural gas pipeline capacity in the Northeast isn’t easy. Environmental rules are tough, local citizens are well-organized, and—in New England in particular—the electricity market structure is not, shall we say, pipeline development-friendly. Still, with gas needs in the region rising, and all that Marcellus gas close at hand, midstream companies are doggedly and creatively pursuing pipeline projects, and making some headway. Today, we update efforts to advance the Constitution Pipeline, the Northeast Energy Direct project, and Access Northeast, all of which are planned to help move Marcellus gas into the heart of New England.

New pipeline projects to take crude out of the Rockies are starting to make the map look like a spider’s web. The latest proposal comes from Spectra Energy – owners of the Express and Platte pipelines that ship crude from Hardisty to Wood River via Guernsey, WY. Spectra hope to build a pipeline carrying light sweet crude from Guernsey to the Midwest pipeline hub at Patoka. The project would bypass Cushing and push more light crude to the east with potential access to Midwest refineries or even the East Coast. Patoka is also poised to become an origination point for shipments to the Gulf Coast. Today we review the Spectra project’s chances in a crowded pipeline field.

The southern half of the Eastern Seaboard is a logical market for the natural gas surplus that will be flowing out of the Marcellus/Utica in coming years. Annual gas consumption in the fast-growing Maryland-to-Florida region now tops 8.7 Bcf/d and is rising quickly, largely due to the ongoing shift from coal-fired to gas-fired power generation. The region is close to major gas production areas in Pennsylvania, West Virginia and Ohio, and already has Williams’ Transco mainline, the gas-transportation equivalent of an eight-lane highway, as well as other Trunkline interstate pipes running right through it.  In this episode of our series on moving gas out of the Marcellus/Utica, we look at pipeline projects Williams and others are planning to transport gas to Southeast consumers.

The idea of using natural gas produced in Pennsylvania to generate power in South Florida would have been considered implausible or even unthinkable just a few years ago. But now it seems likely that by mid-2017 Marcellus-sourced gas will, in fact, be moving deep into the Southeast. Williams’ planned Atlantic Sunrise project will make its Transco mainline bi-directional as far south as Station 85 in southwestern Alabama. From there, Spectra Energy and NextEra Energy’s Sabal Trail pipeline will move Marcellus and other gas into central Florida, and NextEra’s Florida Southeast Connection line will take gas still further south. Today In the second of a two part series, we conclude our analysis of the transformational Atlantic Sunrise project.

<p>Plenty of new natural gas shale reserves have been discovered in Western Canada. In British Columbia (BC) there are four basins (Horn River, Montney, Liard and Cordova) with estimated reserves in place exceeding 1,200 Tcf.</p>