BENTEK Energy, a Colorado-based research and consulting firm, issued a report on Oct. 26 saying that Marcellus Shale natural gas pipeline takeaway capacity will more than double in the next two years, jumping to 8.5 bcf/d by 2013. About 5.0 bcf/d of new Northeast expansion capacity is currently in the planning phase and scheduled to be operational during that timeframe.
These projects will help natural gas producers in the Marcellus grow production volumes and reach premium Northeast markets during peak winter demand. Access to local supply also is expected to mitigate supply disruptions from hurricanes in the Gulf and cold weather impacts in Texas, the Southeast Gulf, the Midcontinent and the Rocky Mountain regions, which all supply the Northeast.
Despite these expansions and supply growth, BENTEK expects New York citygate prices to continue trading at a premium to other Northeast hubs through this winter and winter 2012-13. Of the total incremental capacity, only 1.0 bcf/d will reach New York City by 2013, which is not expected to be enough to completely alleviate capacity constraints to the citygate market.
In the next month, nearly 1.0 bcf/d of Marcellus takeaway capacity is scheduled to come online, as a result of Tennessee Gas Pipeline’s 300 Line expansion, Empire’s Tioga Project, and National Fuel’s Line N Phase 1. The Tennessee expansion will boost forward-haul capacity on their 300 Line by 350 MMcf/d, increasing delivery capacity to interconnects with Algonquin, Transco and ConEdison in White Plains, NY. This additional supply to the Premium Northeast market will put downward pressure on regional prices.
Northeast Market Update:
• Supply expansions through 2013 offer an additional 5.0 bcf/d of Marcellus takeaway capacity.
• Only 1.0 bcf/d of additional capacity is planned to move more supply to New York City by 2013, keeping this market constrained and trading at a premium to other Northeast hubs.
• BENTEK estimates Northeast dry gas production will reach 12 bcf/d by 2016.
• While supply growth is driving expansions, some midstream expansions are also targeting demand growth; The Northeast region has 1.5 bcf/d of new gas-fired power plants proposed to come online by 2016.
