Of the 18 Bcf/d of incremental pipeline takeaway capacity out of the Marcellus/Utica that is due to come online over the next few years, nearly one-third is heading to demand markets in the Southeast via the Atlantic Coast states. The southeastern U.S is a fast-growing region, and its residents and businesses are becoming increasingly dependent on gas-fired power generation –– a real boon to Northeast gas producers. Today, we continue our look at how pipeline takeaway capacity will stack up against Northeast production over the next several years, this time with a focus on projects that will move gas to the Southeast.
The central question in this series is whether, after years of capacity constraints, midstream companies might over-estimate the need for natural gas takeaway capacity out of the Marcellus/Utica, and simply build too many pipeline projects. To assess that, we started in Part 1 by looking at the Northeast production outlook and prospects for supply growth under three commodity price scenarios. We found that even the low price, low production scenario will mean at least some growth for Northeast supply due to the robust producer economics in some parts of the Marcellus/Utica. In Part 2, we began our look at the takeaway capacity side of things, starting with the East corridor. Of the 24 projects RBN is tracking in its Midstream Infrastructure Database Interface (MIDI), six projects totaling 3.3 Bcf/d are headed to the East (New England and Mid-Atlantic states); two projects of 0.65 Bcf/d combined to Canada; four projects of 4.3 Bcf/d to the Midwest via Ohio; eight projects totaling 4.5 Bcf/d to the Gulf Coast via Ohio; and four projects with 5.2 Bcf/d to the Southeast along the Atlantic Coast (see Figure 1 in Part 2). We also took a closer look at the six projects (3.3 Bcf/d) gunning for takeaway capacity out of the Marcellus/Utica to the New England and Mid-Atlantic states (the East corridor), with the majority of that capacity ramping up after 2017. However, as we noted, pipeline development to the heavily populated East Coast markets is especially fraught with public opposition and regulatory challenges that could cause delays or cancellations. We also noted that natural gas demand in New England and the Mid-Atlantic region is highly seasonal — modest during the off-peak summer season and high during cold winter months when demand from space heating kicks in. Those incremental takeaway flows will also depend on demand growth within the region. With all that in mind, in Part 3 we turned our attention to takeaway projects that will allow Northeast supply to seek out demand markets outside the region, starting with the four projects in the Midwest takeaway corridor. Next, in today’s blog, we look at each of the projects that will move Marcellus/Utica gas to the Southeast.