In contrast to the growth in liquids-rich production, Northeastern Pennsylvania dry gas rig counts will contract up to 50% in the short-term due to pipeline capacity constraints and low prices

Friday, February 17, 2012

New Market Alert released: Taming the Beast: Marcellus, Utica & Northeast Exports™

BENTEK’s Taming the Beast: Marcellus, Utica & Northeast Exports Market Alert reveals that 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. In contrast to the pullback in the dry Marcellus, BENTEK expects liquids-rich production in the southwestern Marcellus and Utica shales to grow 5.3 Bcf/d by 2017. Combined with regional summer demand constraints, this will lead to the Northeast becoming a net gas exporter by 2017 during periods of mild weather. Areas such as the Southeast/Gulf, Canada and the Midcontinent all will be impacted as Marcellus and Utica gas pushes into these markets.

BENTEK’s Taming the Beast Market Alert provides a detailed examination of Northeast supply and demand growth over the next five years, including the potential for pushback to other regions or LNG exports. This Market Alert analyzes the impact of three potential drilling scenarios based on available takeaway capacity and the current well inventory: 1) Continued drilling at the current pace, 2) a 25% decline in drilling activity and 3) a 50% decline in drilling activity.

Key takeaways from BENTEK’s Taming the Beast Market Alert:
• Capacity constraints and low prices will cause northeastern Pennsylvania rig counts to decline up to 50% over the next several months.
• Northeastern Pennsylvania pipelines will be constrained by June and remain near capacity through 2017, keeping local supply prices at discounts to Henry Hub.
• Southwest Marcellus and Utica production volumes are expected to quadruple by 2017, growing by 5.3 Bcf/d and filling Texas Eastern pipeline as early as 2015.
• The Northeast U.S. will be nearly supply sufficient in winter months by 2016-17, and will be a net exporter of as much as 1.0 Bcf/d in weaker demand months by 2017.
• Inflows from traditional Northeast supply sources will decline by 80% to just 2.0 Bcf/d, and flip to net outflows on available backhaul capacity, by 2016-17.

BENTEK's Taming the Beast Market Alert also includes dynamic graphs and charts that allow you to click-through to an Analytical Storyboard, where you can watch these market developments unfold over time. When you see the "hand" icon next to a chart or graph, click on the image and you will be connected to BENport to view the dynamic data. This feature is for clients only and you must have a username and password to BENport to access this feature.