While low natural gas prices could lead to a 50% decline in northern Pennsylvania dry gas rig counts in the next several months, a quadrupling of liquids-rich production volumes in the southwestern Marcellus and Utica shales could make the US Northeast a net gas exporter by 2017, Bentek Energy said in a market alert issued Friday.
Bentek is a unit of Platts.
Liquids-rich production in the southwestern Marcellus and Utica shales is expected to grow by 5.3 Bcf/d by 2017, creating sufficient winter supplies of dry gas -- thanks to residual output of dry gas alongside the liquids production -- for the Northeast by the winter of 2016-2017 and leading to possible exports during periods of weaker demand in 2017, Bentek said in its "Taming the Beast: Marcellus, Utica & Northeast Exports" report.
Only a significant decline in dry gas production in Northeast Pennsylvania would reduce the non-producing well inventory to a "manageable" level and provide relief to long-term supply pressure, Bentek said.
Inflows from traditional Northeast supply sources will decline by 80% to just 2 Bcf/d, Bentek said, and flip to net outflows on available backhaul capacity, by the 2016-2017 timeframe. The Southeastern US and Gulf of Mexico, Canada and the Midcontinent will be directly impacted as supplies will get pushed into these markets, according to the report.
Regional summer demand constraints resulting from the growth in residue gas out of the Utica will also prove favorable for exporting gas, Bentek said.
The company said it expects northeastern Pennsylvania pipelines will be constrained by June and will remain near capacity through 2017, thereby keeping local supplies at a discount to Henry Hub. The company said it expects Texas Eastern Pipeline to be completely filled by local supplies by 2015.
