The natural gas pipelines entering into service by the end of this year are expected to enhance deliveries from US Northeast’s Marcellus shale deposit by 30%, extending a supply surplus that assisted to change the prices to decade lows.
Almost 2 billion cu-ft of gas per day are all ready to flow from the West Virginia and Pennsylvania, Ohio lines, towards markets alongside the Eastern Seaboard depending on pipeline-company and government projections. Around 1,000 Marcellus shale wells are unfinished, chiefly due to the deficiency of pipeline infrastructure, as per reports from the Energy Department.
The prices of gas have fallen 60% after 2007 since the producers utilized techniques like fracking or hydraulic fracturing to arrive at the supplies fenced deep within the firm shale layers. Gas futures rolled back to $1.902 per million BTUs (British Thermal Units) in April, the least price after 2002 since stockpiles distended during winter.
Natural gas for delivery in October increased 3.4% or 9.9 cents to attain $3.023 per million BTUs on New York Mercantile Exchange. This year, the prices have profited 1.1%.
Following the April low, the futures have reached an average of $2.679 after increasing to almost $3.277. During 2013’s first quarter, prices may reach an average of $3.20 per million BTU when demand increases depending on the norm of 18 analyst estimations.
Cabot Oil & Gas Corp. possesses a breakeven point, which is probably less than 2, according to Scott Schroeder, the Chief Financial Officer.
According to data from Energy Department, around 4,525 miles of interstate gas pipelines that serve customers from Virginia to Maine have been laid into service since 1996. Almost 693 miles of pipelines in Marcellus, with everyday capacity of 8.06 billion cu-ft are strategized, either already in use or under construction, as per data from Federal Energy Regulatory Commission.
The new lines can quickly add around 1 billion cu-ft Marcellus gas per day to the market and almost two billion, since projects with 3.5 billion cu-ft of extra pipeline capacity will be finished during September- December. In May, the gas output of Marcellus was averaged at 6.85 billion cu-ft per day, as per the most recent data from the Energy Department.
Shale gas has been the main aspect to the nation’s approach towards energy independence. Gains in production assisted US to meet 81% of its energy demand in the year 2011.