Appalachian Production Prices Moving Toward Market Area Quotes, FERC Says

New pipeline capacity out of the Appalachian Basin is helping alleviate bottlenecks from the prolific producing region and will continue to force production and market prices there and in Mid-Atlantic and Northeast market areas ever closer, according to FERC’s Office of Enforcement (OE).

Capacity expansions are helping to erode peak winter spreads, OE said in a Winter Energy Market Assessment released Thursday (see Daily GPI, Oct. 15). Analysis by Federal Energy Regulatory Commission staff concluded that the spread between the Marcellus Shale production area prices and Northeast market prices could be more than halved this winter compared to last year.

“Staff does expect prices in these two regions to generally converge over the coming years as pipeline capacity increases connectivity,” FERC told NGI. “This expectation is also predicated on other factors, including sufficient prices in New England to attract LNG [liquefied natural gas] imports, normal winter weather, and continued increases in Marcellus gas production.”

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