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.
Spectra
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.
Mexico’s power sector is one of three major demand centers U.S. natural gas producers and pipeline projects are targeting, the other two being the U.S. power sector and LNG exports. U.S. natural gas exports to Mexico are up 20% year-on-year in 2016 to date to nearly 3.5 Bcf/d––more than double the export volume five years ago––and are poised to soar past 6 Bcf/d by the end of the decade. Mexico’s energy operators are on a tear adding new natural gas-fired power generation capacity and building a sprawling network of natural gas transportation capacity. But delivering increasing volumes of U.S. natural gas to Mexico will require substantial changes on the U.S. side as well, particularly in Texas. Today, we continue our look at plans for adding pipeline export capacity along the Texas-Mexico border.
Of all the demand markets in the U.S., the biggest prize eyed by Marcellus/Utica natural gas producers is the Gulf Coast region, where a combination of industrial demand, LNG exports and power generation projects is driving a need for more and more gas. And beyond the U.S. Gulf Coast states, there lies still another market capable of gobbling up even more of the excess Northeast gas supply: Mexico’s rapidly growing gas-fired generation sector ––that is, assuming pipelines in Texas can get it all the way there. There is over 4.0 Bcf/d of Marcellus/Utica-to-Gulf-Coast takeaway capacity planned to be completed over the next few years. Today, we look at the status and timing of Northeast pipeline takeaway projects targeting the Gulf Coast.
Surging natural gas production volumes in the Marcellus/Utica will need to move in just about every direction. No single market—not the Northeast, the Midwest, the Southeast, or even the Gulf Coast—is big enough to absorb it all. Midstream companies are considering every cost-effective way to replumb and expand their existing pipelines to add takeaway capacity, and when still more is needed, are turning to greenfield projects. In this, the first of several company-by-company episodes on who is planning what, we examine Spectra Energy’s plans to add at least 2 Bcf/d of new Marcellus/Utica takeaway capacity by 2017, and maybe another 2 or 3 Bcf/d by the end of the decade.
New crude pipeline capacity being added in the Rockies to ease congestion will compete directly with rail terminals built or planned in the region. Some of these rail terminals are purpose built to take barrels off the pipelines for delivery to West Coast refiners or perhaps to facilitate blending of heavier Canadian grades with lighter shale crudes. The competition between pipelines and rail in the region underlines a key accomplishment of the post-shale crude distribution system - the advent of greater choice for producers. Today we describe growing rail alternatives in the Rockies.
With Marcellus natural gas production expected to continue increasing, several companies are proposing projects to pipe a portion of the output through New England to Canada’s Maritime Provinces, where the gas would be liquefied and exported to Europe, Latin America and maybe even Asia. Some offshore Atlantic Basin gas production from Sable Island and Deep Panuke would be mixed in too. Such plans for as many as four new LNG export facilities in Nova Scotia and New Brunswick hinge on the development of new pipeline capacity through New England to the existing Maritimes & Northeast Pipeline (MNP), which would be reversed to flow north. Is this a golden opportunity or an overreach? Today we examine prospects for exporting Marcellus gas through new Eastern Canadian LNG facilities.
This year’s polar vortex winter has once again demonstrated how New England power generators suffer from the region’s shortage of natural gas pipeline capacity during peak demand periods. The Catch-22 to-date has been that new pipelines won’t get built without firm, long-term commitments for pipeline capacity, which the New England power market doesn’t compensate generators for. Faced with rising demand and few alternatives to gas fired generation, the six state governments in the region are now proposing a novel fix: an electric-rate surcharge that would help guarantee pipeline developers the steady revenue they need to justify new projects. Today we examine the states’ plan and its prospects.
There will be no RBN blog published on Monday, January 20th in honor of the Martin Luther King holiday.
Spectra Energy and NextEra Energy’s planned Sabal Trail natural gas pipeline from near Transco Station 85 in southwestern Alabama to near Orlando in central Florida will do more than provide additional gas-delivery capacity to Florida and the welcomed redundancy of a third pipeline to the Sunshine State. The big news is that Williams’ Atlantic Sunrise project by July 2017 will enable large volumes of Marcellus-sourced gas to be shipped south (backwards!) along the Transco pipeline all the way to Station 85. That (and Sabal Trail) will give Marcellus producers something unthinkable until now: access to major gas users as far south as Miami. Today we lay out the basics of what is being planned.
The hopes of Marcellus gas suppliers to move more of their product east are playing out in very different ways in metropolitan New York City and in New England. New pipelines to deliver gas from Pennsylvania, West Virginia and Ohio to the Big Apple and its environs already are installed and operating, easing the metro area’s supply crunch and shrinking regional price “basis”. But plans to expand gas-transmission capacity to New England are stalled, and some gas users there are facing another potentially supply-constrained expensive winter. Today we begin a new series looking at why—for the foreseeable future at least--it’s better to be a gas user in New York City than Boston.
Canada imports as much as 2 Bcf/d of natural gas from the US in the region around the Dawn trading hub. The Dawn system has traditionally been fed by Western Canadian supplies and long haul pipelines from the US Gulf, Midwest and the Rockies. Marcellus gas can already reach Dawn via the border crossing at Niagara to the East. The Nexus Gas Transmission project will bring 1 Bcf/d directly into Dawn from the Utica. Today we detail the changing flows.