Other Market Trends
Utica Shale Attracts Infrastructure Investment. Recently Caiman Energy announced it would build two short pipelines under the Ohio River to bring “wet” (liquids rich) natural gas from the Utica Shale in Ohio to the company’s processing plant in Marshall County, West Virginia. The company will commit $30 million, and such infrastructure investment is another sign of the importance of natural gas liquids in driving domestic production. The Utica Shale is located in the Northeast, and is situated about 8,000 feet below the surface of the Earth, and underneath the Marcellus shale. The Utica is primarily located beneath Pennsylvania, West Virginia, New York, and Ohio, which has recently been a major area of investment and interest. While currently, oil and natural gas production out of the State of Ohio remains small, several companies have made substantial investments, and permitting in the State (specifically in the eastern part of the State, where the Utica shale is located) has expanded. Some key developments and facts:
* On Friday, November 4, Schlumberger Limited’s Smith Bits STATS group reported that there were 16 active natural gas rigs in the state of Ohio.
* In October, 25 drilling permits were issued by the Ohio Department of Natural Resources. This was a record number of permits issued in a single month.
* Chesapeake is among the largest investor, having recently purchased a stake of 1.25 million acres of land. Other major players in the region include Hess Corporation, Chevron, CONSOL Energy, and Enervest.
Short-Term Energy Outlook Projects Continued Natural Gas Supply Growth. EIA released the Short-Term Energy Outlook (STEO) on November 8, with projections through the end of 2012. The latest STEO is also presented in a new, redesigned, interactive format. Among natural gas highlights this month:
* EIA expects U.S. marketed natural gas production to average 65.6 Bcf per day in 2011, and 66.9 Bcf per day in 2012. All of the growth in production results from increases in onshore production, which more than offset continuing declines from the Gulf of Mexico.
* Projected total natural gas consumption averages 67.1 Bcf per day in 2011, and 67.9 Bcf per day in 2012. Residential and commercial consumption are expected to increase in 2012 from their 2011 levels, mirroring the increase in heating degree-days.
* EIA expects that working natural gas inventories will total about 1.8 trillion cubic feet (Tcf) at the end of March 2012, the end of the winter heating season, with net withdrawals during the period totaling 0.3 Tcf less than last year. The projected value would be the highest end-of-March inventory level since 1991.
* Henry Hub natural gas spot prices are expected to average $4.09 per MMBtu in 2011. EIA expects prices to rise slightly to $4.13 per MMBtu in 2012.
More Summary Data