By April 12, 2017 Read More →

New US pipelines will drive shale gas boom as LNG exports surge

shale gas

Upon completion of a number of pipelines to transport shale gas from the Marcellus and Utica fields, the US could become one of the world’s top LNG exporters. Philadelphia Fed photo.

Pipelines give shale gas from Pennsylvania, West Virginia and Ohio access to domestic, global markets

Nearly complete pipelines that will connect rich reserves of shale gas in Pennsylvania, West Virginia and Ohio to new domestic and global markets will help make the United States of the world’s top LNG exporters.

The US Energy Information Administration says American energy firms are scrambling to complete a slew of pipelines that will help the three states supply about one-third of all US natural gas, up from 25 per cent currently.

Marcellus and Utica formations producers have long suffered from a lack of pipeline infrastructure to deliver their goods to market.  The completion of the pipelines will be a welcome boon for firms and investors after slumping prices resulted in reduced demand for oil and gas pipeline capacity from producers.

A task force created by Pennsylvania Governor Tom Wolf showed almost one-third of the wells drilled in his state since 2004 were inactive because of lack of pipelines to transport the gas.

“Drilling for gas in Pennsylvania has far outpaced the development of the infrastructure needed to get that gas to markets,” the task force said in the report. “The primary challenge the industry faces now is to get the gas around or out of Pennsylvania.”


Energy Transfer Partners Rover Pipeline, TransCanada’s Leach XPress Pipeline and Williams Cos Atlantic Sunrise Pipeline are among the largest projects under construction.  These pipelines will move natural gas out of eastern US shale basins to markets in Canada, the US Midwest and Southeast, as well as Gulf Coast export terminals.

The EIA says the pipelines are expected to increase output from both fields by about 59 per cent in the coming two years.  Shale gas from the Marcellus and Utica basins is among the cheapest in the US.

Technological innovation has unleashed massive oil and gas supplies that had been trapped in shale rock.  The resulting shale gas revolution has seen the United States boost its production by 50 per cent, making it the world’s biggest producer.

With gas prices averaging under $3 per million Btu over the past two years, industrial firms are spending billions to expand manufacturing facilities mostly along the US Gulf Coast as well as the Midwest.

Among them is Royal Dutch Shell which is building a multibillion-dollar petrochemical complex near Pittsburgh, close to Marcellus and Utica fields.  The facility will employ about 6,000 workers to build the plant and is expected to create about 600 permanent jobs upon completion.

Along with domestic use, shale gas will also be exported and for the first time since 1957, the US is expected to become a net exporter of gas in 2017 or 2018.


Pennsylvania is home to both the Marcellus and Utica shale gas fields.  The two account for about 20 per cent of US gas production, more than any state but Texas.

Output from the Keystone State rocketed from 0.5 billion cubic feet per day (bcfd) in 2006 to 14.5 bcfd in 2016, according to the EIA and Pennsylvania Department of Environmental Protection.

And, there is potential for Pennsylvania to pump a lot more gas as pipelines open up to move product to new markets.

At least five pipelines with the capacity to transport over seven bcfd from the Marcellus and Utica basins are scheduled to open in 2017, with five more capable of moving another 5 bcfd are expected to be complete in 2018.

If all pipelines under construction are completed, pipeline capacity from Pennsylvania, Ohio and West Virginia would increase from about 23 bcfd to over 35 bcfd.

Ryan Unger, CEO of Team Pennsylvania Foundation says pipeline construction and shale gas production growth could mean billions of dollars in new investments in Pennsylvania.  Jobs will extend well beyond the energy sector.

“We are in a position now where we can maximize the state’s resources to create good, stable jobs in Pennsylvania,” Unger told Reuters.

Chesapeake Energy Corp, Cabot Oil & Gas, Range Resources Corp and EQT Corp are among the state’s biggest drillers who are expected to benefit the most from the increased pipeline activity.

Cabot spokesman George Stark says his company sees an opportunity in the “underserved” markets of the northeast.

“We’d love to see a pipeline build-out to get Pennsylvania gas to New England,” he said.

All told, the four companies together expect to spend an estimated $4.8 billion on US drilling and well completions this year, an increase of about 61 per cent over 2016 spending, according to a capital expenditure analysis by Cowen & Co.


In 2016, the United States started to export LNG.  Five export terminals supplying LNG to Asian markets including China and Japan are expected to open by 2020.

The addition of the terminals could make the US the world’s third largest exporter of natural gas by 2018, according to an EIA projection.





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