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Planned pipeline expansions will raise natural gas outlook

Shane Thielges | Shale Plays Media

An already-surging domestic natural gas market will be bolstered further by a bevy of new and expanded pipeline projects slated to begin operation within the next couple of years, argues Margaret Ryan in an article published today in Interfax Energy’s Natural Gas Daily.

Onshore natural gas production in the U.S. currently averages 1.95 billion cubic meters per day, led by drilling in Pennsylvania’s Marcellus formation. That’s seven percent higher than at the same time last year. The EIA predicts that figure will easily reach 2 billion by the end of the year.

“US gas supply is poised to meaningfully outpace demand over the next few years,” said analysts Marshall Adkins and Edward Rowe of Raymond James & Associate.

This high production has bolstered natural gas stockpiles, easing fears of skyrocketing gas utility costs during seasonally cold weather, as occurred in New England last year. In fact, analysts say, there’s enough gas coming out of the ground now to keep prices below the $4 per million British Thermal Units for years to come.

That’s also a lot more natural gas than the country’s existing pipeline infrastructure is designed to handle. Drilling has increased more rapidly than transportation systems, meaning companies have to wait to get their product to various markets and are often stuck placing it in storage facilities.

However, a number of gas transmission projects are already planned to correct this deficit, and will come online within the next one to three years. When that happens, it will boost an already soaring industry to new heights.

Teri Viswanath, director for natural gas strategy at BNP Paribas said the US may be facing a “second shale gale” as pipeline constraints disappear. Projects expected to be operational by 2017 could take 425 MMcm/d from the Marcellus and Utica shales alone, she noted.

As an example, Ryan mentions Spectra Energy’s TEAM South project, which has had its flow direction reversed to move gas inland to the Gulf of Mexico and which began operations two months ahead of schedule this month.

Check out Natural Gas Daily for the rest of the story: Second ‘shale gale’ builds in the US as pipeline constraints ease

Related: Export expansion precedes proliferation of pipelines

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