New pipelines necessary to meet natural gas demand
The area, made up of the Marcellus formations and the Utica Shale, saw a less drastic change in production and drilling activity during the economic contraction caused by the COVID-19 pandemic.
GlobalData’s latest market analysis report revealed that the Appalachia region averaged 32.19 billion cubic of natural gas per day (bcfd) and 33.44bcfd in 2019 and 2020 respectively.
While major oil-producing operators slashed their 2020 capital expenditure up to 50-60%, the top three producers in the Appalachia Basin – EQT Corporation, Antero Resources, and Southwestern Energy – cut their capital only by 20%, 35% and 40% respectively.
Andrew Folse, oil and gas analyst at GlobalData, said: “The EIA forecasts that liquid natural gas (LNG) exports will continue to grow to an average of 8.50bcfd in 2021.”
Currently the US has an export capacity of 9.17bcfd, and, with current planned and under construction projects, this value will grow to 11.97bcfd in 2023.
While other sites near the Gulf Coast such as the Permian Basin, Eagle Ford, and the Haynesville are better located to provide natural gas to meet LNG feedstock demand, the Marcellus and Utica can also play a relevant role in supplying natural gas to the new LNG facilities located on the Gulf Coast, but additional pipeline capacity will be needed.
Folse added: “For the Appalachia Basin to significantly grow production in the future it will need to gain more access in infrastructure to transport natural gas, in particular for reaching the LNG plants in the Gulf Coast. In the meantime, the basin will continue to play a key role in supplying other non-LNG related natural gas demand in other US regions such as the Northeast and the Midwest.”