Marcellus-Utica Developments: Pipelines, Prices and Power

Transcription

1 Platts 7 th Annual Pipeline Development & Expansion Conference Marcellus-Utica Developments: Pipelines, Prices and Power Samantha Santa Maria Managing Editor, Platts September 21, 2012

2 Agenda The Marcellus Shale & changing gas pipeline infrastructure in the US and Canada The promise of the Utica Shale Northeast supplies serving Southeast power gen growth LNG exports NGLs: The next frontier

3 The Marcellus Shale & changing gas pipeline infrastructure Gas-on-gas competition Lagging takeaway capacity, increasing supplies 3

4 The Marcellus Shale & changing gas pipeline infrastructure Penn State 4 Total NE production ~ 10 Bcf/d in 2013; 14 Bcf/d by 2015; 15 Bcf/d by 2017 (Bentek) Capacity additions also set to ramp up: 4.3 Bcf/d in Bcf/d in Bcf/d in Bcf/d in 2015

5 The Marcellus Shale & changing gas pipeline infrastructure Tennessee Gas Pipeline: A tale of two zones Source: Kinder Morgan

6 The Marcellus Shale & changing gas pipeline infrastructure Periods of high demand, gas restricted by traditional constraints have led to bifurcated markets, rampant production levels Platts spot prices ie. Tetco M-3, Algonquin receipts, Transco zone 6- non NY 6

7 The Marcellus Shale & changing gas pipeline infrastructure Exports into Canada National Fuel Gas' Empire Pipeline from Corning, NY, to Ontario (320,000 Mcf/d) by 2H2012 Iroquois Gas from Waddington, New York, to Ontario already online Tennessee Gas at Niagara Falls, New York by 2H2012 TransCanada s Eastern Mainline expansion into Ontario (up to 422,000 Mcf/d) (4Q 2012) Spectra/DTE/Enbridge s 1 Bcf/d Nexus in 2016 Total capacity expansions ~ 2 Bcf/d by 2016

8 The Marcellus Shale & changing gas pipeline infrastructure Source: IESO Ontario coal-fired power shut down by 2014 Gas use in Ontario for power gen in 2015 ~ 0.9 Bcf/d; 2020 ~ 1 Bcf/d (Ziff Energy)

9 The Marcellus Shale & changing gas pipeline infrastructure 9

10 The promise of the Utica Shale Ohio s Utica: 5 billion barrels of oil, 15.7 Tcf of gas (Ohio state geologist) Median analyst forecast: 250,000 Mcf/d by end-2012; 2 Bcf/d by 2019 One well drilled in 2010; 94 in 2011; 265 YTD (Ohio DNR) Gas pipelines Nisource s 0.2 Bcf/d gathering system Spectra s 0.6 Bcf/d TEAM 2014 Spectra s 1 Bcf/d Ohio Pipeline Energy Network (OPEN) Spectra/DTE/Enbridge s 1 Bcf/d Nexus 10

11 The promise of the Utica Shale Natural gas liquids Production: 50,000 b/d in 2015; 150,000 b/d by 2019 (median analyst figures) Projects: 50,000 b/d Mariner West (July 13); EPD s 90,000 b/d ATEX (Q1 14) Midstream: CHK s $900m midstream complex in Columbiana County Gas demand in Ohio Steel: $795m invested in new plants, expansions Power gen: 12.5 GW of new gas-fired generation coming online by 2013 Power gen in June: 70% coal, 18% gas; 9% nuke (In 2011: 82% coal, 11% nuke, 5% gas) 11

12 Changing the US power generation mix EIA 12

13 Changing the US power generation mix Platts, NYMEX (prices in $/MMBtu) 13

14 Changing the US power generation mix Net Generation by Fuel Type (Thousand MwH) EIA 14

15 Changing the US power generation mix Power plant unit retirements in the Southeast 42 units from Jan 2012-Dec 2016 ( MW) 37 are coal units, totaling MW or 77.2% New power units in the Southeast 167 new units from ( MW) 23 are natural gas-fired: 5 in Georgia, 13 in North Carolina, 1 in Tennessee, 4 in Florida (8437 MW or 60.8% of all new generation) 1 new coal unit (June 2012 in NC); 1 syncoal (May 2014, MS); 29 solar units (Sept 2012 Dec 2013; 26 in NC); 2 nukes (Jan 2014 in TN; June 2016 in GA) 15

16 Changing the US power generation mix Name Date Capacity Location/s Status Williams Constitution Pipeline March ,000 Mcf/d PA, NY Planned Williams Virginia Southside Expansion Sept TBD VA, NJ, NC Planned Spectra's Renaissance Gas Transmission Late Bcf/d Williams Atlantic Access Dec 2.3 Bcf/d Commonwealth Pipeline TBD 800,000 Mcf/d TN, AL, GA Planned PA, NC, GA, WV PA, DC, MD Planned Planned

17 LNG exports 2011 US LNG exports Brazil Chile China India Japan Mexico Russia South Korea Spain UK 2012 YTD US LNG exports Brazil Chile China India Japan Mexico Russia South Korea Spain UK

18 LNG exports Export opportunities to gas-starved, premium-priced Asia, Europe; widening of the Panama Canal in 2014 that would lower shipping costs from USGC

19 LNG exports 14 possible export projects: 5 in Canada, 9 in US ~ 18 Bcf/d announced; 2014 at the earliest

20 NGLs: The next frontier NGL median production forecast for Marcellus: 210,000 b/d by 2018 Utica NGL forecast: 50,000 b/d by 2015; 100,000 b/d by 2018

21 NGLs: The next frontier Northeast Pennsylvania rig count Southwest Pennsylvania rig count RigData

22 Platts NGLs: The next frontier

23 NGLs: The next frontier In Marcellus, producers rejecting at least 55% of ethane recovered Nationwide ethane rejection (1.5 Bcf/d 2 Bcf/d) In Marcellus alone, rejection has more than doubled the volumes of PA production hitting Dominion

24 NGLs: The next frontier

25 Questions? Samantha Santa Maria T: