Natural gas production from the US’s Marcellus and Utica shale plays is forecast to cross the 42 billion ft3/d mark by 2025, according to GlobalData – assuming gas prices stay above US$3.5 per 1 million Btu. GlobalData notes that no new pipelines are expected to come online after 2023, despite the fact that North America is the largest gas producer and supplies approximately 40% of the total natural gas production in the US.
Svetlana Doh, Senior Upstream Oil & Gas Analyst at GlobalData, comments: “Environmental opposition in Pennsylvania, home to the majority of Appalachia basin production, created an onerous and exhausting approval process for pipeline operators. Pipeline projects in both the Atlantic Coast and PennEast were cancelled on environmental grounds, and it appears that getting approval is going to be challenging for any future major pipeline in the Northeast.”
While the Appalachia basin has the potential to ramp up production to 47 billion ft3/d by 2030, pipeline and infrastructure limitations put the play at risk of curtailing production in the future based on the midstream factor alone.
Doh continues: “The combined power of both current pipeline infrastructure and the 11 gas pipelines planned to be built in Pennsylvania, Ohio, and West Virginia by 2023 will be able to support a mere 41 billion ft3/d of natural gas flowing capacity.”
Doh adds: “With respect to LNG production, Marcellus and Utica could play an important role in driving demand for natural gas supply in the US, given their resource potential. However, it will require additional pipeline capacity to bring natural gas to the Gulf Coast, where most of the under-construction and approved plants are to be located.”
Although there is additional natural gas from other plays such as Permian and Haynesville, with a combined growth of 6.9 billion ft3/d of natural gas by 2025, future LNG capacity can require much more. In only six years, US LNG capacity increased from zero to almost 11 billion ft3/d, and, currently, the pool of LNG approved projects totals 26.3 billion ft3/d. With natural gas demand worldwide expected to continue to increase, US LNG developers can have the economic incentive to accelerate the addition of new capacity.
Doh adds: “The US has large accumulations of natural gas that could be developed in the current price environment, and coupled with additional LNG capacity, can further increase the US’s natural gas exporting capacity. Shale operators have generally recovered from the lows caused by demand destruction during the 2021 pandemic-related crisis and have also remained competitive. This means that even with the increase in Henry Hub prices, given natural gas prices in other world regions, US LNG exports are quite profitable.
“With new LNG terminals launching next year, the US is on track to become the largest LNG exporter in the world and an important player to partially fill the demand gap in Europe and Asia.”
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