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Several large natural gas interstate pipeline projects have come online in recent years to support the shifting geography of domestic natural gas production. The Marcellus and Utica shale plays in the Northeast, where production has grown and resources are abundant, are major drivers for pipeline development. In 2016, the Federal Energy Regulatory Commission (FERC) certificated 17.6 billion cubic feet per day (Bcf/d) of new natural gas pipeline capacity. So far in 2017, FERC certificated more than 7 Bcf/d of new pipeline capacity before losing its quorum following the departure of one commissioner in February, which left just two sitting commissioners and three vacant seats.FERC oversees the interstate transmission of natural gas, which includes the regulation of interstate transportation rates and services for natural gas pipelines, natural gas pipeline construction, and related pipeline environmental matters. Pipeline certification involves reviewing applications for the construction and operation of natural gas pipelines and ensuring that applicants comply with safety standards.Receiving a certificate is just one step in the process of building and operating a new pipeline; pipelines receiving certification in 2017 will not necessarily come online in 2017.The seven projects certificated during the first few weeks of 2017 include more than 1,500 miles of natural gas pipeline construction and expansions, involving combined additions of more than 7 Bcf/d of capacity. The pipeline projects are concentrated in the eastern half of the United States to improve access to markets for growing eastern natural gas production, and they have projected 2017 and 2018 in-service dates.
Falling natural gas prices would be even lower if not for a growing U.S. export market — both via pipeline to Mexico and through liquefied natural gas shipments around the world.Warm winter weather has been hard on U.S. natural gas producers, who have watched prices do nothing but slide since the end of last year. Natural gas futures are down 22 percent since the beginning of the year, having run up in late 2016 on the expectation that winter heating demand would result in much more gas coming out of storage.
Cheniere Midstream Holdings is looking to build a 200-mile pipeline that would move 1.4 billion cubic feet of natural gas from Okarche to Bennington.This includes three compressor stations, with one in Bryan County and in Garvin county.”Right now we’re estimating it could be up to a $1 billion project that could potentially bring up to 1,000 jobs during production.” Director of Government and Public Affairs for Cheniere Midstreams said.
The correction in U.S. natural gas production has finally arrived. Volumes are down close to 5% since peaking in late 2015, driven by declines in associated gas and higher-cost legacy areas as well as ongoing curtailments and pipeline constraints across the Northeast United States. Natural gas prices have rallied as a result, with 2017 Henry Hub futures increasing almost 15%, to an average of $3 per thousand cubic feet.
The appointment of Oklahoma Attorney General Scott Pruitt to head the Environmental Protection Agency (EPA) reveals that President-elect Trump is dead serious about his campaign promises to rein in environmental regulations and revive the coal industry. Pruitt is a vocal critic of the EPA’s Clean Power Plan (CPP), which seeks to cut carbon dioxide emissions from power plants, and he has threatened to dismantle CPP to end the “war on coal.”AuthorsDDevashree SahaSenior Policy Associate and Associate Fellow – Metropolitan Policy ProgramSSifan LiuResearch Assistant – Metropolitan Policy ProgramHowever, the war on coal is a false narrative that oversimplifies what is happening in the energy economy. In blaming environmental regulations under the Obama administration as the sole reason for the recent turmoil in the coal industry, Trump and Pruitt are ignoring fundamental market realities that are buffeting the industry.
Following Monday’s announcement that MarkWest Energy Partners (MWE) is being purchased by MPLX (MPLX), other midstream MLPs rallied.
SunTrust Robinson Humphrey analyst Tristan Richardson writes in his afternoon report on the deal:
We see the transaction as a validation of the long term demand for US NGL infrastructure. As the NGL barrel has declined, G&P firms and firms with exposure to liquids have seen valuations compress. Pro forma MPLX will be a significant handler of NGLs in the US and we think speaks to long term potential for midstream development around NGLs, despite current depressed prices.
Several Northeast players gained on the deal announcement, including Genesis Energy (GEL), up 4%, DCP Midstream Partners (DPM), up 3% and Targa Resources Partners (NGLS), up 2.5%.
Richardson believes the deal is particularly bullish for Enterprise Products Partners (EPD), which didn’t benefit on Monday. He writes:
EPD has pulled back amid concerns of NGL prices and the ability to grow in a difficult environment. The proposed deal speaks to the long term potential for the NGL market and the buildout of NGL infrastructure to new sources of market demand including NE export, Gulf export, Midwest refining and Canada, where EPD remains a leader with significant organic growth opportunities.
Richardson has a Buy rating on EPD and listed it among his favorite midstream MLP stocks in a mid-June report.
DENVER, July 14, 2016 /PRNewswire/ — Antero Resources (NYSE: AR) (“Antero” or the “Company”) today provided its second quarter 2016 operations update.
U.S. natural gas prices have risen by a third since hitting a two-decade low in the first quarter, amid signs supply and demand are rebalancing and excess stocks left over from an unusually warm winter are being worked down.The volume of gas in working storage hit a record 4.01 trillion cubic feet in November 2015 and is still at 3.18 trillion cubic feet, according to the U.S. Energy Information Administration (tmsnrt.rs/29AF787).Gas stocks are 513 billion cubic feet (19 percent) higher than in the same week in 2015. But the build has shrunk steadily from a record 1.014 trillion cubic feet (69 percent) in March (tmsnrt.rs/29tgsGw).In response to the earlier slide in prices, the number of rigs drilling for oil and gas across the United States has fallen to the lowest level since World War Two.By the start of June 2016, there were just 82 rigs drilling for gas, down from over 300 in June 2014, according to services company Baker Hughes.Output from the unusually productive wells drilled into the Marcellus and Utica shale formations underneath Pennsylvania and Ohio has continued to increase.But output from older gas-producing states including Texas, Louisiana and Oklahoma has fallen sharply as drilling activity has dried up.For the United States as a whole, there are no longer enough new oil and gas wells being drilled to replace declining gas output from old wells.
Houston-based Enterprise Products Partners LP (NYSE: EPD) continues to expand its natural gas footprint as natural gas production and piping continues to grow in the U.S.The midstream energy company announced June 20 it plans to build a cryogenic natural gas processing facility — its third facility announced in less than 24 months — as well as additional natural gas and natural gas liquids pipelines. Enterprise’s target: the NGL-rich Delaware Basin in West Texas and southeastern New Mexico. The facility’s site hasn’t been determined, but the plant is expected to have a nameplate capacity of 300 million cubic feet per day and extract more than 40,000 barrels of NGL daily. The facility is expected to start up in the second quarter of 2018.The project also includes building rich natural gas gathering lines, a residue pipeline to Texas’ Waha oil field and an NGL pipeline to Enterprise’s Mid-America Pipeline system, all of which will integrate with Enterprise’s Delaware Basin infrastructure.“The South Eddy facility began operations earlier this year, while our joint venture processing plant at Waha is expected to begin service in the third quarter of 2016,” A.J. “Jim” Teague, CEO of Enterprise’s general partner, said in the company’s statement. “Altogether, these initiatives are expected to increase our processing capacity in the Delaware Basin to 800 MMcf/d, compared to 40 MMcf/d in 2012.”Enterprise is the fourth-largest Houston-based public company, based on its $47.95 billion in revenue in 2014, according to Houston Business Journal research. It reported nearly $27.03 billion in revenue for 2015.