SUMMARY: In this quarterly issue of Energy Watch, ESAI presents an in-depth analysis of shale gas production in the Marcellus and Utica regions and the potential outcomes for basis pricing at the various Northeast gas pricing points. The forward curves imply that most basis spreads in the Northeast will be enduring such that winter premiums at pricing points such as Tetco M3, Transco Zone 6 NY and Algonquin City Gate will be enduring over the next ten years. ESAI presents analysis that strongly suggests that there will be convergence in gas basis pricing as long haul pipeline builds increase exports from the region (tightening discounts to Henry Hub) and short haul pipeline builds alleviate bottlenecks within the region. The glide path of convergence is uncertain, however, ESAI presents three potential convergence scenarios.
Find out more in this issue of ESAI’s Northeast Energy Watch QuarterlyTM.