US gas market nears tipping point as imports to East Coast fall

By CHRISTINE BUURMA
Bloomberg

For proof that the US is about to become a net exporter of natural gas, take a look at what’s happening in the Northeast.

The region extending from Maine to New Jersey and Pennsylvania has been a net-exporter of gas at times this year, pushing average pipeline imports from other parts of the US and Canada to just 0.3 billion cubic feet/day in 2015, according to data provider PointLogic Energy. That would be the smallest amount for any year in figures going back to 2007, if the trend persists.

The data underscore how the flood of gas from the Marcellus and Utica shale formations in the eastern US is transforming the country’s role in the global market. Net US gas imports have slumped to the lowest in decades, and Cheniere Energy is preparing to ship the first cargoes of liquefied natural gas (LNG) from the lower 48 states early next year.

“The Marcellus has really come into its own,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “There’s certainly no shortage of gas anywhere in the US now, and that means exports are around the corner.”

The US is on course to become a net gas exporter in 2017, Jan Stuart, global energy economist at Credit Suisse Group in New York, said in a note to clients Wednesday. The country’s production may climb 6.3% this year to 79.58 billion cubic feet/day, reaching a record for the fifth consecutive year, government data show.

Collapsing Prices

Natural gas futures have collapsed under the weight of the supply glut. The heating fuel for next-month delivery is down 29% this year, heading for a second straight annual decline. In October, prices dipped below $2/MMBtu for the first time since 2012. Gas for January delivery fell 0.5% to $2.061 at 8:43 a.m. Thursday on the New York Mercantile Exchange.

Gas nominations for Cheniere’s Sabine Pass liquefied natural gas terminal in Louisiana surged to a record on Wednesday, data compiled by Ventyx show. The company has said it’ll start LNG production this month and ship the first cargo about four to six weeks after that.

“We’ve seen the Northeast reaching unprecedented production levels,” said Gene McGillian, a senior analyst and broker at Tradition Energy in New York. “It’s a huge turnaround for US gas supplies.”

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