A Wind from the Northeast: Major Changes Coming in Gas Market Pricing
Washington D.C., August 22, 2012 – “In 2011, annual gas production in the Appalachian Basin tested 2 Tcf, and is approaching 3 Tcf in 2012. This has substantially reduced the call on Gulf Coast and Western Canada gas production by the Northeast states,” says Dr. Thomas J. Woods, Senior Consultant of RBAC, Inc.
In its Q2 2012 release, the GPCM® Natural Gas Market Forecasting System indicates that Appalachian Basin gas production is expected to exceed 80% of Northeast gas demand in 2012. By 2014, annual production will exceed Northeast gas demand. In 2035, annual Appalachian production will be greater than twice Northeast gas consumption. Thus, a growing share of Appalachian gas production will flow westward into Midwest states and southward into South Atlantic states pushing back Gulf Coast, Midcontinent, Permian Basin, Western Canada, and Rocky Mountains production from these regions. This will significantly affect regional gas prices in North America.
“Varying differentials among North American wellhead prices in the coming years suggest the role of Henry Hub as a contract price marker will have a shrinking geographic utility,” says Dr. Woods.
RBAC Inc. is a leader in the development of energy market models, most notably the GPCM® Natural Gas Forecasting System. Dr. Woods is an expert in energy economics and has over 35 years of experience in North American oil, gas, NGL, electricity, transportation, and market issues.
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