American Oil and Gas Reporter - April 2016 - 99

ConventionCoverage: Ohio Oil & Gas Association

Pipeline Expansions Help
Ohio's Shale Growth
By Dan Holder
COLUMBUS, OH.-A three-year push
to expand natural gas transportation out
of the Appalachian Basin is laying the
groundwork for national and global use
of Ohio-produced gas, John Krohn told
the Ohio Oil & Gas Association's winter
meeting, held March 16-18 in Columbus.
Krohn, communications manager at
the U.S. Energy Information Administration, said that before the shale revolution,
most Appalachian-produced natural gas
was consumed in the region, but that was
not the case anymore.
"Take-away capacity in 2013 from the
Northeast to other regions-specifically
Canada and the Midwest, Southeast and
Southwest-was 3.5 million cubic feet a
day. In 2015, that grew to 5.5 MMcf/d, a
growth rate of nearly 71 percent," he
said. "I am sure some people in this room
would like that to grow more, and it
will."
As of February 2015, EIA data show
the Marcellus and Utica regions accounted
for 85 percent of the increase in U.S.
natural gas production, he reported. Krohn
pointed out that the Utica had been increasingly prolific. Production from all
Utica Shale wells increased 323 percent
since February 2014, from 840 MMcf/d
to 3.59 billion cubic feet a day.
Nationally, shale production has grown
to become 56 percent of all domestic
output, up from 21 percent only six years
ago, he indicated. "It came on pretty
strong, and it came on pretty fast," Krohn
assessed.
In addition to reporting on midstream
developments affecting Ohio, Krohn laid
out EIA's historical tracking and future
projections for Utica shale development,
and offered the agency's short-term pricing
predictions.
Gas Pipelines
The most anticipated of the midstream
developments completed or proposed for
the Appalachian Basin are the Rockies
Express Pipeline reversal and Texas Eastern Transmission's Ohio Pipeline Energy

Network (OPEN) project, Krohn assessed.
He pointed to the latter as especially significant for Ohio producers. Its 550 MMcf
of additional capacity will deliver gas to
the Gulf Coast. A proposed Broad Run
Expansion project by the Tennessee Gas
Pipeline Co. will help West Virginia and
Kentucky operators, he added.
Other projects in the planning stages
will add 6.2 Bcf of take-away capacity
out of the Utica Shale region, Krohn
said, including Energy Transfer Partners'
Rover Pipeline, which would move as
much as 3.25 Bcf/d.
"Rover will take natural gas to market
hubs in the Midwest, the Gulf Coast,
Canada and other U.S. Northeast markets.
Its project schedule has it on line in 2017,"
he said, quoting the project's website.
He added that permitting delays or
other factors could impact that schedule.
"That project will bisect Ohio from the
southeast to the northwest, and it will be

The Northeast's take-away capacity has
jumped nearly 71 percent in two years,
although many Appalachian Basin operators would like to see even more increases, assesses John Krohn, communications manager at the U.S. Energy
Information Administration. He was one
of the speakers at the Ohio Oil & Gas
Association's winter meeting, held March
16-18 in Columbus, Oh.

a significant addition to the region's midstream infrastructure," Krohn said.
Ohio's natural gas also could be moving
overseas in the near future, Krohn projected. One possible outlet is Sabine Pass,
Cheniere Energy's LNG liquefaction terminal in Cameron Parish, La., he added,
which sent its first shipment to Brazil on
Feb. 23.
Two other LNG projects are under
construction, he said. Cheniere also is
moving ahead with its Corpus Christi
liquefaction project, which will use as
much as 385 MMcf/d from the Natural
Gas Pipeline Company of America's Gulf
Coast Mainline Pipeline system. The Dominion Cove Point facility is another
likely customer of Appalachian gas. The
Maryland site is scheduled for service
late in 2017, and may need as much as
750 MMcf/d for exports, he reported.
"This all is happening because people
in this room are getting really good at
pulling pretty prolific quantities of natural
gas out of the ground," Krohn told OOGA.
Price Projections
One of the consequences of that shale
gas productivity is an oversupplied natural
gas market, Krohn indicated. Henry Hub
spot prices averaged $1.99 an MMBtu in
February, he said, which was down $0.29
from January.
"This winter was difficult for natural
gas prices. As you experienced here in
Ohio and across the country, mild winter
conditions caused storage numbers to be
significantly higher, and that put real
downward pressure on prices. Production
growth continues, and those factors put
downward pressure on the price of gas,"
he said.
EIA's short-term forecast sees those
pressures lingering through the spring,
Krohn reported, adding that the agency
predicts gas prices will increase in later
spring or early summer as electric power
demand moves toward its summer peak.
Krohn pointed out the National Oceanic
and Atmospheric Administration was forecasting a warmer-than-normal summer
for most of the United States. Gas plants
replacing coal for electric generation
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