RBN Energy: is the northeast natural gas market no longer pipeline capacity constrained?
The difference this year is this: while the regional balance is more bearish than last year, there also is more pipeline capacity available—such as REX’s incremental 0.8 Bcf/d added in December 2016—to send gas away, which has helped relieve constraint-driven pricing at some hubs.
Additionally, when REX’s 0.8 Bcf/d began service, it didn’t have the effect on production that previous expansions had. Instead of garnering new production, flow data indicated that it primarily “stole” existing production from other pipes, presumably leaving capacity open elsewhere.
This may signal the beginning of the next phase of the Northeast’s transformation into a U.S. supplier of gas—the unconstrained phase. There is more takeaway capacity due later this year and more capacity to serve regional demand as well, with Williams’s Dalton Expansion online and the Cove Point LNG export facility due to begin operations later this year. That said, rig counts are on the rise again as well after bottoming out last fall. Baker Hughes rig count data show the rig count in the Marcellus is 45 rigs, up from a low of 21 in mid-August 2016, while rigs in the Utica have more than doubled from 10 a year ago to 23 now.
While we have yet to see an uptick in Northeast production this year, it seems only a matter of time before production follows.Scott Adams: how to know whether you are a real person or a simulation.