November 2013, Vol. 240 No. 11

Features

U.S. Natural Gas in the Midst of a Sea Change That Will Alter Flows, Prices

Massive shale-driven production growth in the Northeast and soaring demand from the Southeast will turn the nation’s traditional south-to-north and west-to-east pipeline natural gas flows and price spreads upside down, according to a report by market analysts at BENTEK Energy.

“Based on our latest modeling, the U.S. is embarking on a true sea change,” said Rocco Canonica, BENTEK director of Energy Analysis. “The Northeast is poised to switch from the nation’s largest demand region to a net supply region, and the Southeast is racing to become a much larger net demand region after being a major supplier to the U.S. gas market.”

In its 10-year outlook report, “Son of a Beast – Utica Triggers Regional Role Reversal,” BENTEK reported more than one-third of the U.S. natural gas production increase from 2013 to 2023, or 9.1 Bcf/d, is expected to come from the Utica and Marcellus shale formations in the Northeast, while nearly half of U.S. demand growth, or 9.4 Bcf/d, is expected to occur in the Southeast.

“This will contribute to making the Southeast a premium market relative to most other regions, pulling increasing amounts of gas from the Northeast, Texas and the Midcontinent,” said Tony Sweet, BENTEK senior energy analyst.

Other predictions from the 110-page report:

• There will be a 9% rise in natural gas prices by late decade at Henry Hub.

• Natural gas flows to the Northeast from other regions will plummet with net Northeast outflows to total 2.8 Bcf/d by 2023.

• The liquids-rich shale plays of Texas and the Midcontinent will contribute 44% of the expected U.S. natural gas supply growth over the next 10 years.

• Total U.S. natural gas demand will rise 27% during the next decade, while supply will climb nearly 38%.

• There will be a substantial reconfiguration and repurposing of the U.S. natural gas pipeline grid.