Natural Gas Intelligence
Rockies Express Aims to Be Shale 'Expressway'

Monday, May 20, 2013

What once was Rockies producers' hotshot ride to higher netbacks is to be remade as the "expressway to the markets" from the Marcellus and Utica shales. The Rockies Express Pipeline LLC (REX) is embarking on a "great reversal" with the aim of sparing Appalachia producers the pricing pain felt so deeply out west half a decade ago.

"...Utica gas needs to flow west," REX Chairman Bill Moler said last Wednesday at Bentek Energy LLC's Benposium in Houston. "It can do 1.8 Bcf/d west to east; it's a very minimal capital expenditure for us to turn that pipe around or make it truly bi-directional so it will be 1.8 Bcf/d east to west. We need to act now. The price downfall is coming."

REX and the Ruby Pipeline, which carries gas west from the Rockies, both were built to bring price relief to Rockies producers, and they did what they were supposed to do. "Fast forward just three years and the landscape from 2009 has changed dramatically," Moler said. Widespread expectations are that the Marcellus and Utica will be putting out 18 Bcf/d by 2018 and swamping the Northeast market in the summer and then potentially year-round, he said.

"Production in the Appalachia region has increased from 2.7 to nearly 8.2 Bcf/d in 2012...The Utica is on its way up. We have seen first-hand that dry gas wells are coming on with significant IP [initial production] rates in the neighborhood of 30 MMcf/d."

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