Pipeline expansions in the US Northeast will unlock supplies of natural gas from the Marcellus shale, in large part driving a small uptick in production that is expected by the end of 2011, analysts from Bentek said Friday in their winter forecast.
Nearly 600,000 Mcf/d of new capacity will be added in November to Tennessee Gas Pipeline's 300 leg, which has been packed full of Marcellus gas, limiting the amount of production that can come to market.
That jump in pipeline capacity will be one of the main drivers in a forecast for production to increase by 200,000 Mcf/d to 62.1 Bcf/d in November, as producers prepare for peak winter demand, the analysts said in a report.
That additional supply is also forecast to make up for production expected to be lost from freeze-offs in the Midcontinent and West regions, which feature gas streams with higher liquids and water content.
"The Tennessee 300 line expansion will enable strong production growth from northern Pennsylvania," the Bentek report said. "The expansion will enable Marcellus producers to reach premium markets during peak winter demand on top of potential declines in inflows from the Southeast Gulf and Midcontinent as a result of freeze-offs."
The uptick in supply will temper imports from Canada and liquefied natural gas from overseas, keeping those volumes at or below 2010 levels except during peak winter conditions, the report said.
On the other side of the equation, the analysts said industrial demand is not expected to increase significantly year-over-year, though some small growth is seen in chemicals, fertilizers and aluminum.
Bentek's forecast for Henry Hub cash prices is $4.42/MMBtu for the winter, with January prices reaching $4.59/MMBtu.
Bentek is a unit of Platts, a division of The McGraw-Hill Companies.
