Shale gas producers staring down a supply glut that has pushed prices to record lows in Appalachia are getting their first look at relief.
Several long-awaited pipeline projects are coming online over the next few months that should start increasing the prices some Marcellus and Utica shale drillers get for their gas as it finds paths to more lucrative markets in the Midwest.
“They've been held captive to these lower prices in Appalachia with no other place to take their gas,” said Teri Viswanath, a natural gas analyst at BNP Paribas in New York. “The continued cycle of new takeaway projects will accelerate a price increase.”
With high supplies and not enough demand to consume it all here, selling gas in Appalachia has meant taking a deep discount. The spot price on the Dominion South trading point in Southwestern Pennsylvania hit 71 cents per million British thermal units on July 2, which Viswanath said was a record low.Read more by clicking here.
The article goes on to note that even rebounded prices in Pennsylvania were still less than half the going rate at the Chicago Citygate trading point. Clearly, producers hope to get gas to the Midwest as soon as possible. Meanwhile, consumers in the Midwest will likely see lower prices once these new pipelines allow extra supply to hit the market.
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