• 4 hours WCS-WTI Spread Narrows As Exports-By-Rail Pick Up
  • 9 hours Norway Grants Record 75 New Offshore Exploration Leases
  • 13 hours China’s Growing Appetite For Renewables
  • 16 hours Chevron To Resume Drilling In Kurdistan
  • 19 hours India Boosts Oil, Gas Resource Estimate Ahead Of Bidding Round
  • 20 hours India’s Reliance Boosts Export Refinery Capacity By 30%
  • 21 hours Nigeria Among Worst Performers In Electricity Supply
  • 1 day ELN Attacks Another Colombian Pipeline As Ceasefire Ceases
  • 1 day Shell Buys 43.8% Stake In Silicon Ranch Solar
  • 2 days Saudis To Award Nuclear Power Contracts In December
  • 2 days Shell Approves Its First North Sea Oil Project In Six Years
  • 2 days China Unlikely To Maintain Record Oil Product Exports
  • 2 days Australia Solar Power Additions Hit Record In 2017
  • 2 days Morocco Prepares $4.6B Gas Project Tender
  • 2 days Iranian Oil Tanker Sinks After Second Explosion
  • 4 days Russia To Discuss Possible Exit From OPEC Deal
  • 4 days Iranian Oil Tanker Drifts Into Japanese Waters As Fires Rage On
  • 5 days Kenya Cuts Share Of Oil Revenues To Local Communities
  • 5 days IEA: $65-70 Oil Could Cause Surge In U.S. Shale Production
  • 5 days Russia’s Lukoil May Sell 20% In Oil Trader Litasco
  • 5 days Falling Chinese Oil Imports Weigh On Prices
  • 5 days Shell Considers Buying Dutch Green Energy Supplier
  • 5 days Wind And Solar Prices Continue To Fall
  • 6 days Residents Flee After Nigeria Gas Company Pipeline Explodes
  • 6 days Venezuela To Pre-Mine Petro For Release In 6-Weeks
  • 6 days Trump Says U.S. “Could Conceivably” Rejoin Paris Climate Accord
  • 6 days Saudis Shortlist New York, London, Hong Kong For Aramco IPO
  • 6 days Rigid EU Rules Makes ICE Move 245 Oil Futures Contracts To U.S.
  • 6 days Norway Reports Record Gas Sales To Europe In 2017
  • 6 days Trump’s Plan Makes 65 Billion BOE Available For Drilling
  • 6 days PetroChina’s Biggest Refinery Doubles Russian Pipeline Oil Intake
  • 7 days NYC Sues Five Oil Majors For Contributing To Climate Change
  • 7 days Saudi Aramco Looks To Secure $6B In Cheap Loans Before IPO
  • 7 days Shell Sells Stake In Iraqi Oil Field To Japan’s Itochu
  • 7 days Iranian Oil Tanker Explodes, Could Continue To Burn For A Month
  • 7 days Florida Gets An Oil Drilling Pass
  • 8 days Oil Prices Rise After API Reports Staggering Crude Oil Draw
  • 8 days Tesla Begins Mass Production Of Solar Shingles
  • 8 days EIA Boosts World Oil Demand Forecast For 2018 By 100,000 Bpd
  • 8 days Businessman Seeks Sale Of $5.2B Stake In Kazakhstan Oil Field
Alt Text

China Gas Imports Hit All-Time High

Natural gas imports into China…

Alt Text

Romania Poised To Ramp Up Gas Output

Often overlooked, Romania has huge…

Irina Slav

Irina Slav

Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

More Info

Why U.S. Shale Drillers Can’t Sell Their Gas

Permian

Natural gas output from the U.S. shale formations is at a record high. So are recoverable gas reserves, according to the Potential Gas Committee. This sounds like good news for everyone except producers: there just are not enough pipelines to transport the gas, which is already uncomfortably cheap because of the abundant supply.

As natural gas prices recovered from the lows they hit last year on oversupply, shale producers became bolder and started ramping up, just like oil drillers did. As a result, according to Bloomberg data from June, output in the Marcellus shale and the Permian has hit a record. In the Marcellus shale, daily output is close to 20 billion cu ft, while associated gas in the Permian is creeping closer to 10 billion cu ft daily.

As of last week, the Energy Information Administration calculated gas output in Marcellus at 19.55 billion cu ft daily. Output in the Permian was 8.49 billion cu ft. Utica produced 4.45 billion cu ft of natural gas. Haynesville and Eagle Ford both yielded more than 6 billion cu ft of gas. Next month, the EIA projects shale gas production to continue rising across the board, reaching a total 52.858 billion cu ft daily, from this month’s estimated 52.021 billion cu ft.

Meanwhile, West Virginia’s Department of Environmental Protection has ordered Energy Transfer Partners to stop work on the construction of Rover – set to be the biggest natural gas pipeline project under construction in the country. The order is yet another stumbling block for the US$4.2-billion, 713-mile pipeline that was supposed to transport gas from Utica and Marcellus to other parts of the United States. Earlier this year, a drilling fluid spill along the construction route in Ohio prompted the Federal Energy Regulatory Commission—the body in charge of gas pipelines—to ban horizontal drilling during construction. Related: Daily OPEC Oil Prices Now Public For The First Time Ever

The delay of the Rover completion—until this fall, probably—is bad news for ETP, certainly, though the company behind the Dakota Access pipeline should by now be used to such hurdles. It’s also bad news for producers because, as the Wall Street Journal’s Spencer Jakab writes in a recent story, Utica and Marcellus gas is selling at a substantial discount to the Henry Hub benchmark.

At the end of the day, the pipeline capacity shortage is bad news for consumers as well, for safety reasons. Pipelines have been proven to be the safest way of transporting petroleum, natural gas, and oil and gas products, when compared with other means of transportation such as trucks and railway. Charles Hughes, in a piece for U.S. News and World Report, cites calculations of 0.66 incidents per billion ton-miles along oil pipelines for the period 2007 to 2016, and 0.73 for natural gas pipelines. These figures compare with 2.20 incidents per billion ton-miles for trains and 7.11 incidents per billion ton-miles for trucks.

The situation is pretty simple: the pipeline shortage is making it difficult for everyone from producer to consumer to make the best of the current abundance of natural gas supplies. Environmental considerations are certainly legitimate and must be addressed immediately, which ETP should know by now after the whole Dakota Access debacle. Yet, Jakab notes the company had a very short period to complete the construction of the pipeline, which may have led to the incidents that have now caused its delay. The fact remains, America is short on pipelines to transport its natural gas from the places where it is in oversupply to the places where it is needed.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment
  • Dan on July 25 2017 said:
    Interesting side note about Ng. I bought a few things at Family Dollar while traveling and the bag, a very heavy, sturdy plastic bag was made of natural gas. Makes you think of the possibility of perhaps natural gas made fencing, car parts, etc. All which would benefit mankind in an environment way much more than drilling fluid which is cleaned up. The way of government though.
  • rjs on July 26 2017 said:
    that's a myth...we are still importing more natural gas from Canada than we are exporting to Mexico and liquifying for export…moreover, our own natural gas production has been falling year over year for 14 months straight…i wrote about exactly this situation two weeks ago:

    http://www.economicpopulist.org/content/great-us-natural-gas-exports-myth-6112

    all EIA data is shown

Leave a comment




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