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Gas Supply Surge | Russell T. Rudy Energy LLC

Increased use of natural gas for power generation, pipeline sales to Mexico, and LNG (Liquefied Natural Gas) exports have all helped firm up natural gas prices. Investors responded by increasing drilling for gas and adding pipeline capacity in the Marcellus shale of Pennsylvania, Ohio and West Virginia, thereby increasing supply.  Meanwhile, the oil boom in the Permian Basin of West Texas and Southeast New Mexico has led to large incremental volumes of casinghead, or oil well, gas seeking a market.  A recent article in “Rigzone” cautions that these increased supplies in two major shale basins could lead to competition for market share in Midwest markets and downward pressure on prices.

With domestic natural gas production racing toward record levels, Justin Carlson, of East Daley Capital Advisors Inc., observed, “Everyone can’t grow and everyone can’t win. Marcellus producers did not count on the Permian.”

According to the U. S. Energy Information Administration, Marcellus gas output will increase .5% to 19.4 billion cubic feet per day (bcfd) from June to July, and Permian production will rise by 1.9% to to 8.5 bcfpd over the same period. This would be record output for both plays.

Marcellus production might be somewhat constrained by the competition from the Permian Basin, but operators still believe that output could increase by 14.5 bcfd between now and the end of 2019. Carlson believes that 11 bcfd is more realistic given the increase in Permian supply and filling the new Marcellus pipelines might take longer than originally anticipated.

To read the article in its entirety, please go to http://www.rigzone.com/news/article.asp?hpf=1&a_id=150568&utm_source=DailyNewsletter&utm_medium=email&utm_term=2017-06-14&utm_content=read&utm_campaign=feature_2 .

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.