U.S. Natural Gas: In The Midst of A Change That Will Alter Flows, Prices
Massive shale-driven production growth in the U.S. 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¬†Bentek Energy¬ģ, the natural gas and oil analytics unit of¬†Platts, a global energy and commodities information provider.
“Based on our latest modeling, the U.S. is embarking on a true sea change,” said¬†Rocco Canonica, Bentek Energy director of energy analysis and lead author of the just-released 10-year outlook report¬†Son of a Beast — Utica Triggers Regional Role Reversal. “The Northeast is poised to switch from the nation’s largest demand region to a net supply region, and the U.S. Southeast is racing to become a much larger net demand region after being a major supplier to the U.S. gas market.”
The 114-page report says that more than one-third of the U.S. natural gas production increase from 2013 to 2023‚ÄĒor 9.1 billion cubic feet per day (Bcf/d)‚ÄĒis expected to come from the Utica and Marcellus shale formations in the northeastern U.S., while nearly half of U.S. demand growth, or 9.4 Bcf/d, is expected to occur in the Southeast over the same period.
“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 Energy senior energy analyst and one of many speakers at Platts Commodity Week.
Bentek forecasts a 9% rise in natural gas prices by late decade at Henry Hub, a key North American hub and pricing reference.
Additional takeaways from the report include among others:
- Natural gas flows to the Northeast from other regions to plummet; net Northeast outflows to total 2.8 Bcf/d by 2023
- The liquids-rich shale plays of¬†Texas¬†and the Midcontinent to contribute about 44% of the expected U.S. natural gas supply growth over the¬†next 10 years
- Total U.S. natural gas demand to rise 27% over the next decade, while U.S. supply to¬†climb nearly 38%
- Substantial reconfiguration and repurposing of the U.S. natural gas pipeline grid
The report focuses on supply and demand fundamentals and highlights regional market changes afoot for more than a dozen natural gas production basins. It also includes an update on more than a half dozen expected liquefied natural gas (LNG) projects and a summary of anticipated flow changes in the Southeast/U.S. Gulf Coast,¬†Texas, Midcontinent, Midwest, Rockies, Southwest, and Pacific Northwest.
Looking beyond the U.S., the report also contains baseline natural gas forecasts for¬†Canada¬†and¬†Mexico. To download an overview, click¬†here.