With up to 18 Bcf/d of natural gas supplies expected by 2018 from the Marcellus and Utica shales, the logical place to carry excess gas is west, according to Rockies Express Pipeline LLC (REX) CEO Bill Moler.
Moler spoke on a panel Tuesday at the LDC Gas Forum Mid-Continent in Chicago. He has made several sales pitches for REX to become bidirectional; it now moves gas from the Rockies to eastern markets (see Shale Daily, May 16). In July the pipeline agreed to transport for an undisclosed Utica producer up to 200,000 Dth/d to Midcontinent markets (see Daily GPI, July 17).
Harkening back to the industry’s experience in the 2005-2008 period when REX was developed, Moler said new takeaway capacity moving east-to-west from Appalachia could drive down gas prices as the pipelines out of the Rockies did five years ago. He said Marcellus/Utica gas supplies now stand at 8.2 Bcf/d, with forecasts of 18 Bcf/d in 2018. With Utica gas only about 400 MMcf/d today, its production could “come on strong” in the years ahead.
“Production is coming on and capacity is constrained,” said Moler. He labeled that what is happening with production in southern Ohio as “crazy.” There is 2 Bcf/d processing capacity either coming online or under construction, he said in making a pitch for reverse flows on REX to bring these new supplies to the Midwest markets.
“I think we are going to have a very large chunk of these supplies coming into REX, and if that doesn’t happen, I think we’ll have an eastern gas crisis looming,” Moler said. “What happened in the Rockies could easily happen again in the East. So Utica gas needs to flow west.” For Midwest customers, this would mean that they could arbitrage gas prices between the Rockies and the northeastern shale plays.
TransCanada Corp.’s Richard Vaughan, a Houston-based business development director, and Alliance Pipeline CEO Terrance Kutryk made similar pitches to move gas supplies in and around the Chicago metropolitan area. Kutryk touted the Alliance Chicago Exchange (ACE) hub, and Vaughan said the TransCanada U.S. lines were prepared to move added northeastern gas supplies to the Midwest and Gulf Coast markets.
Kutryk emphasized that the 2,300-mile Alliance line from northeastern British Columbia to Aux Sable south of Chicago has proximity to two shale basins in Western Canada and the Bakken Shale, and there is a “strengthening of gas prices” in the Chicago market compared to other regions. He thinks that is encouraging for future excess supplies from both Canada and the Bakken.
With the ANR Lebanon (OH) Lateral expected to be in service before the end of this year, Vaughan said there will be plenty of capacity for moving added supplies both northwest to Chicago and south to the Gulf Coast through interconnections that are available. “We will be ready to serve a lot of add load,” he said.
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