EIA: Marcellus gas production continues to outpace takeaway capacity

Rising production of natural gas in the Marcellus shale play in the Appalachian basin continues to outpace the growth in the region’s pipeline takeaway capacity, which has led to supply backups in the region, the US Energy Information Administration reported in a weekly gas report.

Because of this fact, EIA observed, new gas production is unable to flow to areas of high demand, “placing downward pressure on prices in the region.”

EIA noted that this phenomenon has also “contributed to a number of natural gas wells in Marcellus remaining backlogged, with a Feb. 28 report from Barclay’s estimating that more than 1,300 wells there are drilled but not completed.”

EIA noted that several proposed and recently completed projects will provide additional pipeline infrastructure to relieve some of the Marcellus supply glut.

“Projects that have recently come online, such as Transcontinental Pipeline Co.’s (Transco) Northeast Supply Link, have expanded the capacity of pipelines to move gas north, into the New York and New England demand centers. Recently, there have also been several proposed projects to move natural gas from the Marcellus region south, reversing flows on pipelines that historically sent natural gas from the Gulf Coast to consumers in the Northeast,” EIA said.

Transco announced on Apr. 17 that natural gas shippers entered into firm delivery contracts for the full 0.44 bcfd of planned expansions under its Dalton Expansion Project. The Dalton project allows gas to flow south from New Jersey to Georgia on the Transco mainline. Transco currently has a peak design capacity of 9.8 bcfd, and flowed as much as 2.8 bcfd of Marcellus gas to the Northeast this winter, according to data from Bentek Energy LLC, EIA reportd.

Transco has submitted a request with the US Federal Energy Regulatory Commission for the Dalton project, and currently plans to begin construction in April 2016 and begin service in May 2017.