• 6 minutes Saudis Threaten Retaliation If Sanctions are Imposed
  • 11 minutes Can the World Survive without Saudi Oil?
  • 15 minutes Saudis Pull Hyperloop Funding As Branson Temporarily Cuts Ties With The Kingdom
  • 5 mins WTI @ $75.75, headed for $64 - 67
  • 2 hours Trump vs. MbS
  • 3 hours Saudi-Kuwaiti Talks on Shared Oil Stall Over Chevron
  • 7 hours The Dirt on Clean Electric Cars
  • 14 hours Uber IPO Proposals Value Company at $120 Billion
  • 5 hours Closing the circle around Saudi Arabia: Where did Khashoggi disappear?
  • 3 hours EU to Splash Billions on Battery Factories
  • 18 hours COLORADO FOCUS: Stocks to Watch Prior to Midterms
  • 8 hours Coal remains a major source of power in Europe.
  • 5 hours Poland signs 20-year deal on U.S. LNG supplies
  • 21 hours UN Report Suggests USD $240 Per Gallon Gasoline Tax to Fight Global Warming
  • 14 hours U.N. About Climate Change: World Must Take 'Unprecedented' Steps To Avert Worst Effects
  • 17 hours Nopec Sherman act legislation
Alt Text

China Turns Its Back On U.S. Oil

As the ongoing trade war…

Alt Text

U.S. Oil Companies Face $240 Billion Debt Mountain

U.S. oil producers are facing…

Alt Text

Why Crypto Miners Are Paying Attention To The Permian

The Permian is literally burning…

Chris Pedersen

Chris Pedersen

Chris Pedersen is the Managing Director of U.S. Operations for Oak Leaf Energy Training Inc., an energy education firm with offices in Houston and Calgary.…

More Info

Trending Discussions

Marcellus Gas Displacing Alberta Suppliers

Marcellus Gas Displacing Alberta Suppliers

For anyone covering the energy industry, it is often wise to take most production forecasts with a healthy dose of skepticism. The Marcellus shale gas production growth has turned out to be an exception to this rule. This 104,000-square-mile play, which covers parts of New York, Pennsylvania, Ohio and West Virginia, has been an overwhelming success, producing 14 billion cubic feet per day (bcf/d). Back in 2007, the Marcellus was only producing a paltry 1.2 bcf/d.

This newfound supply is shaking up markets and squeezing out some longstanding natural gas suppliers, particularly Alberta. Eastern Canada has traditionally received the majority of its natural gas from Alberta and the Western Canadian Sedimentary Basin. Since the late 1950s, Alberta’s prolific fields have had a competitive advantage in sending natural gas east to the densely populated and energy hungry provinces of Ontario and Quebec. Many analysts believe that this market advantage is over. Enbridge reports that it is now sending roughly 400,000 mcf/d of Marcellus gas to Eastern Canada. TransCanada is also sending Marcellus gas to eastern Canada through their Canadian Mainline. The Alberta Energy Regulator notes that mainline shipments from the Alberta-Saskatchewan border to Ontario have dropped by four bcf/d since 2006.

Another reason why Marcellus gas has been able to displace Alberta gas is the growth in oil sands production. The fastest growing form of production within the oil sands is the In Situ process. This process requires large amounts of natural gas. Today, about one million barrels of oil are produced by this method, but the Canadian Association of Petroleum Producers (CAPP) predicts that In Situ production will rise to two million barrels per day by 2020.

Related Article: Shale Revolution Spreads to the South

The result of these two market forces has been favorable to Marcellus producers seeking new markets. Eastern Canada also has a resource that is lacking in other markets: Pipeline capacity. The northeastern United States, with a population of roughly 57 million, has a large demand for natural gas, but very limited pipeline capacity. Existing pipeline infrastructure failed to keep up with demand over the past winter. In January at the Algonquin Citygate trading point in Massachusetts, prices rose from normal levels of $3-$6/MMBtu during uncongested periods to $38.09/MMBtu during peak demand.

Looking forward, it seems Marcellus gas will continue to grow in Eastern Canada. Spectra Energy Corp. has proposed the Nexus Gas Transmission, a 400-kilometer, $1.5 billion pipeline link that will move natural gas sourced from the Marcellus and Utica north to the Ontario market. Enbridge is also planning to start construction at the end of the year on the $680 million Greater Toronto Area pipeline, with a capacity of 800,000 million cubic feet per day (mcf/d), of which 200,000 mcf/d will be sourced from the Marcellus. As Marcellus gas production is expected to reach 20 bcf/d by 2020, producers will continue to be aggressive in accessing new markets.

By Chris Pedersen


x


Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News