An estimated 9.6 Bcf/d or more of incremental interstate and intrastate pipeline takeaway capacity is forecast to hit the Haynesville Shale region by 2012, which will likely be enough to keep up with production, but the bottleneck at the Perryville Hub in Louisiana will be an issue beyond 2011, analysts with Raymond James & Associates Inc. said last week.
Darren Horowitz and Emily Wang, writing in the Stat of the Week, noted that gas output is expected to reach 2.5-3 Bcf/d or higher by late 2010 or early 2011. The potential exists for the Haynesville Shale, including the Bossier Sands in East Texas, to be a 6 Bcf/d or higher producing region by 2014, and the pipelines slated to be built "should provide adequate takeaway capacity to serve the region on a forward basis," they said.
Another 3 Bcf/d of gathering pipes and 2.5 Bcf/d of treating capacity is scheduled to arrive in the coming year. "When taking all this into account," said the duo, "including a leap of faith around permitting and construction schedules materializing as planned, the region should have adequate midstream infrastructure to serve production needs."
Some of the proposed pipelines are expected to divert gas flowing eastward to the Perryville Hub, but "we are still concerned with gas-on-gas competition at Perryville beyond 2011 as receipt capacity (gas flowing in) will be greater than delivery capacity (gas flowing out)," said Horowitz and Wang. "With a lack of proposed delivery takeaway pipelines from Perryville...we ask, will someone please find a home for Perryville gas?"
The Raymond James analysts said they believe the Louisiana hub can handle the shale gas now, but beyond 2011, the hub may face delivery takeaway issues, with too much gas flowing into versus out of the hub. Two proposed pipeline projects, Enbridge Inc.'s LaCrosse Pipeline (see NGI, Nov. 16), and the Haynesville Extension, by Enterprise Products Partners LP and Duncan Energy Partners LP (see NGI, Nov. 23), could alleviate some of the oversupply if they are built, the analysts said. (Last week Enbridge officials said an open season for LaCrosse had not done as well as expected, but they will continue to pursue their plans.)
"Instead of taking gas eastward, the two pipelines will move the gas Southeast," the Raymond James analysts noted. "Aside from these two pipelines, another potential pipeline project has recently been proposed by CenterPoint Energy Inc. and the FPL Group to transport up to 2.0 Bcf/d of gas to the Perryville Hub," which is operated by CenterPoint.
Operators, noted the duo, have appeared reluctant to commit to takeaway projects from the Perryville Hub to flow eastward for a variety of reasons:
Most shale gas, not just Haynesville Shale gas, "will undoubtedly end up flowing eastward to the Perryville Hub," said the Raymond James team. "While the hub has extensive deliverability capabilities due to its pipeline interconnect network, we believe it will begin facing delivery takeaway issues by 2011...In fact, with west-to-east Texas basis differentials narrowing this past year, we have already seen early indications of gas-on-gas competition, even before entering Louisiana."
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