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Midcontinent to Become Awash in NatGas, Say Experts

With robust production growth in the Appalachian Basin and extensive infrastructure expansions on both sides of the U.S. and Canadian border, the Midcontinent figures to become awash in natural gas during the next five years, according to three industry experts who spoke Tuesday at an energy forum in Chicago.

At the LDC Gas Mid-Continent Forum, Union Gas Ltd. business manager Paolo Mastronardi and TransCanada Corp.’s John Hampton, U.S. central region pipeline business development director, described aggressive infrastructure expansion plans that are tied to the projected supply growth in the U.S. Northeast.

Canada-based Union is banking on new infrastructure tied to its Dawn storage hub in Ontario, and TransCanada bids to leverage the strategic advantages it holds with its ANR pipelines and storage that serves North America.

ANR Pipeline has one project to connect with Utica/Marcellus gas, enabling it to access multiple markets downstream of the system (see Daily GPIJuly 9). The scalable, multi-part project would allow the gas to access the Midwest, Gulf Coast and Dawn.

"Why Dawn?" Mastronardi asked rhetorically. "We're the largest natural gas integrated storage facility in Canada and the third largest traded natural gas hub in North America. We have access to reliable and plentiful natural gas supplies in the Utica and Marcellus and access to markets in eastern Canada, the U.S. Northeast and Midwest."

Hampton emphasized that TransCanada intends to exploit the strategic advantages of its ANR pipeline/storage assets, given the projections for robust growth for the Marcellus and Utica plays. In 2007, TransCanada acquired ANR, Michigan storage assets and a 50% interest in Great Lakes Gas Transmission from El Paso Natural Gas (see Daily GPIFeb. 23, 2007).

"All the projections now show the Marcellus becoming the largest gas producing basin in North American history, and most projections on production are showing it will hit more than 25 Bcf/d," Hampton said. As a result, he said TransCanada has had four open seasons from 2013 through last winter to open up the number of delivery points in the Northeast basin.

The Utica may offer the lowest prices to serve the Midcontinent region, but Hampton said the Marcellus-Utica production growth is "the real deal,"and in a relatively short time they will lead North America in natural gas production.

Bentek Energy energy analysis director Jack Weixel estimated that the Midcontinent has 11 Bcf/d of planned pipeline capacity additions, and said there will be 4 Bcf/d of added production in the Marcellus and Utica formations between 2013 and 2016.

He noted that there is "a lot of supply out there" nationwide, led by the Marcellus, and the U.S. Northeast would be a net exporter of gas beginning in 2015.

"There are just a lot of projects out there going forward,” said Weixel. "By 2016 there will be 4.6 Bcf/d of added capacity into the Midcontinent.”

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