Platts
Marcellus gas to see long-term discount as pipelines chase production: Bentek

Friday, August 24, 2012

As infrastructure build-out lags rapid production growth from the Marcellus Shale, prices for Marcellus gas will continue to track well below Henry Hub for a couple more years, according to Bentek Energy.

The discount that Tennessee zone 4-300 leg spot prices will hold to Henry Hub will average 69 cents/MMBtu this summer; 22 cents this winter; 59 cents in summer 2013; 17 cents in winter 2013-14; and 38 cents in summer 2014, said the forecast issued late Thursday by Bentek, a unit of Platts.

Bentek said Marcellus gas prices will get some support as pipeline projects and expansions are brought into service, with prices rising about 50 cents/MMBtu at the end of the year when the TennesseeGas Pipeline Northeast Supply Diversification and Natural Fuel Northern Access expansions go into service.

The projects will add a combined export capacity of about 400,000 Mcf/d to Canada and another 100,000 Mcf/d to New England markets. But the large amount of Marcellus gas is expected to quickly fill that capacity, Bentek said.

The next major uplift for Marcellus prices will occur when TennesseeGas' Northeast Upgrade project begins service in November 2013, Bentek said. The project will add more than 600,000 Mcf/d of capacity to the 300 line to move existing and incremental supply to the New York markets via Texas Eastern Transmission's NJ-NY expansion being planned by Spectra Energy.

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