U.S. natural gas flows, price spreads changing

October 10, 2013 | By Barbara Vergetis Lundin

Massive shale-driven production growth in the U.S. Northeast and soaring demand from the Southeast will turn the nation's traditional south-to-north and west-to-east pipeline natural gas flows and price spreads upside down, according to experts at Bentek Energy.

Utica shale near Fort Plain, New York. Credit: Michael C. Rygel/Wikimedia Commons

"Based on our latest modeling, the U.S. is embarking on a true sea change," said Rocco Canonica, Bentek Energy director of energy analysis. "The Northeast is poised to switch from the nation's largest demand region to a net supply region, and the U.S. Southeast is racing to become a much larger net demand region after being a major supplier to the U.S. gas market."

More than one-third of the U.S. natural gas production increase from 2013 to 2023 -- or 9.1 billion cubic feet per day (Bcf/d) -- is expected to come from the Utica and Marcellus shale formations in the northeastern U.S., while nearly half of U.S. demand growth, or 9.4 Bcf/d, is expected to occur in the Southeast over the same period, according to Bentek research. This will contribute to making the Southeast a premium market relative to most other regions, pulling increasing amounts of gas from the Northeast, Texas and the Midcontinent.

Bentek forecasts that the liquids-rich shale plays of Texas and the Midcontinent will contribute about 44 percent of the expected U.S. natural gas supply growth over the next 10 years. Total U.S. natural gas demand will rise 27 percent over the next decade, while U.S. supply will climb nearly 38 percent, according to Bentek.

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