The news out of the Haynesville Shale and the nearby Bossier Sands keeps getting better for producers there, but to the north production from the developing Marcellus Shale could block the southern gas from traveling north to lucrative markets, some caution.
Looking north from the Perryville Hub in North Louisiana one can see what appears to be a clear shot to the high-dollar burner tips of the Midwest and Northeast through pipes constructed years ago to carry Gulf of Mexico gas. Rick Whitworth, Boardwalk Pipeline vice president of business development, told a Houston audience at an Argus Media conference last week that there is about 3.3 Bcf/d of available long-haul capacity from Perryville to the Northeast (see related story).
Speaking at the same conference, Bill Maxwell, vice president of natural gas for commodities trader The Gavilon Group LLC, tallied up the north-bound pipeline options for Haynesville producers. Texas Gas Transmission targets the Lebanon, OH, area, Maxwell noted, while Tennessee Gas Pipeline, Columbia Gulf Transmission and Texas Eastern Transmission go to the Northeast. "And then you've got Trunkline [Gas] and ANR [Pipeline] that pretty much go to the Michigan-Chicago corridor," he said. "So really out of Perryville you've got three nice options going North."
Hurricane-free shale gas from North Louisiana seems like it would be an easy sell, but the the Midwesterners and Yankees are tapping their own natural gas breadbasket in Pennsylvania -- and to a lesser extent New York -- and it's called the Marcellus Shale. This gas is hurricane-free and local, points that haven't been missed by one gas marketer serving the region (see NGI, Feb. 22).
"I think it's darn hard for Haynesville Shale gas to aggressively go north-south," said Chesapeake Energy Corp.'s Bill Wince, who is vice president of transport and development for the Haynesville heavy-hitter.
Wince said Haynesville producers will have to contend with displaced gas from the north that will push down on their supplies. He noted that at certain times some have taken backhaul capacity at nearly full rates to get back to the Gulf Coast and sell their gas.
"And so I think that Haynesville gas needs to look to storage and east-west activity because I think Marcellus is going to be a big factor with respect to our ability to move north-south," he said. "If you're a north-south pipe, Marcellus gas is going to become the dominant supply feature for you, and these systems will by and large be bifurcated."
If Haynesville gas is indeed shut out of northern markets, it clearly has demand to serve in the Southeast and Florida. Additionally, "there are going to be times when you'll have backhaul capacity...from the Haynesville back to Carthage [TX], perhaps down to Katy [TX]," noted Maxwell. Gas can also move from Perryville south to the Henry Hub, Whitworth noted.
Getting back to Katy or the Ship Channel sounds like a plan to Wince. "I think the shale gas in terms of where it looks to market itself needs to follow the conventional gas declines," he said. "With conventional gas declines in certain areas of the West, West Texas, especially gas in the Texas side of the Haynesville needs to think about ways to get back to Katy and the Ship Channel, which may be stronger markets for it, and you also have a little bit of infrastructure that you can maybe utilize so maybe it won't be as expensive."
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