Gas Exports to Canada | Russell T. Rudy Energy LLC
The shale revolution resulted in a surplus of gas, especially in the Marcellus shale area of Pennsylvania, West Virginia and Ohio. As a consequence, prices plummeted and gas producers had to scramble to find new markets. Some of the cheap gas replaced coal for power generation. The abundance also gave rise to a number of Liquefied Natural Gas projects, one of which is already exporting. Some excess gas, especially from the Eagle Ford Shale play of South Texas, is being sold by pipeline to Mexico. Now, “Rigzone” reports that a number of gas projects are underway to sell Marcellus shale gas to Canada.
Spectra Energy, TransCanada and Energy Transfer Partners all are opening or expanding pipelines to double the flow into Canada by 2027. TransCanada is going a step further, agreeing with Columbia Pipeline Group to buy its line with direct access from the Marcellus into Canada.
This influx of cheap gas from the Marcellus is bad news for Canadian producers who have to ship their product from Western Canada to compete in markets in the more populous Eastern provinces of the country. This is only the latest in a series of setbacks for Canadian operators. Nine years ago the U. S. imported 16% of its natural gas from our northern neighbor. By 2014 the volume had dropped to less than 10%.
Last year Canada produced 12 billion cubic feet of natural gas per day (bcfpd) compared with almost 80 bcfpd in the U. S. This month the Marcellus shale alone will produce 17.4 bcfpd. This production has to either find a market or be shut in. Fortunately, Spectra’s Nexus and Atlantic Bridge projects will transport 1.6 bcfpd to Canada from the Marcellus by the end of next year. This will involve the reversal of a line that originally brought Canadian gas to the U. S. Yet another project, Energy Transfer’s Rover line, will take Marcellus gas to the upper Mid-western U. S. where it will connect with a line to Ontario.
TransCanada is also considering reversing its Iroquois line which had previously exported to the Northeastern U. S. The reversal would result in exporting Marcellus gas to Eastern Canada.
As Samir Kayande with RS Energy Group in Calgary observed, “There is no question that more supply is hitting the market. No matter where it comes from, it’s going to lower the price for everyone.”
To read this article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=143488&utm .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
