Helped by a new pipeline expansion, Marcellus and Utica gas producers have ramped production to record levels this winter. The supply growth is contributing to weakness that has pushed natural gas prices below $2/MMBtu.
East Daley Analytics’ pipeline samples covering the Appalachian region hit a record high in December 2023, averaging 34.5 Bcf/d for the month. Northeast samples declined some in January following freeze-offs from Winter Storm Heather, but volumes have rebounded back above 34 Bcf/d in February samples.
Growth in the basin is coming from both the northeastern Pennsylvania (NE-PA) and southwestern Pennsylvania (SW-PA) areas of development (see figure). In NE-PA, where producers target dry Marcellus gas, supply gains have followed the start of the Regional Energy Access (REA) expansion of the Transcontinental Gas Pipe Line (Transco).
Transco owner Williams (WMB) began partial service on the REA project in October 2023. REA adds 450 MMcf/d of capacity on the Liedy line into the Transco Zone 6 (non-New York) market. The project increases connectivity from the Leidy storage hub in Pennsylvania to the northern end of the Transco system in New Jersey.
As a result, we have seen growth in the pipeline sample data East Daley uses as a proxy for near-term production trends in our Macro Supply and Demand Forecast. Since the start of the REA expansion, NE-PA samples have increased over 800 MMcf/d (see figure).
Chesapeake (CHK) holds capacity on the REA expansion and is also the primary producer on WMB’s Bradford gathering system, where we have seen volumes grow 353 MMcf/d in pipe samples since REA began service.
Williams plans to place the remaining 379 MMcf/d of capacity from REA into service ahead of next winter in 4Q24, likely continuing to this trend of NE-PA growth. – Alex Gafford Tickers: CHK, WMB.
New Webinar: Big Picture and Bottom Line – Q1 Market Update
Join East Daley CCO Justin Carlson on Wednesday, March 10 for a new webinar reviewing market developments from 1Q24. In “Big Picture and Bottom Line – Q1 Market Update,” EDA will look at market trends in crude, gas and NGLs since our Dirty Little Secrets report. Topics include Permian growth or slowdown, the big picture on Louisiana and ripple effects on gas, the LNG pause, and midstream M&A. Join us March 10 for the 1Q23 Market Update.
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New EDA Product: Houston Ship Channel Supply & Demand
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Energy Data Studio
East Daley Analytics has launched Energy Data Studio, a platform for our industry-leading midstream data and commodity production forecasts. All clients have access to the new client portal. If you have not yet logged in, please fill out the form to request a registration email be resent.
Energy Data Studio leverages our G&P data set for insights into midstream assets across every major oil and gas basin in North America. Users can navigate detailed visual dashboards by region, pipeline, or individual asset to understand crude oil, natural gas and NGL supply at the most granular level.
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