Pipeline construction in the U.S. Northeast is lagging behind natural gas production, according to the U.S. Energy Information Administration (EIA) has stated. This leads to oil and gas companies being unable to ship their production via pipelines and creates a bottleneck at existing pipelines, as well as a potential backlog in transportation and delivery.
The good news is that there has been a surge in investment in the midstream segment of the industry, with several large projects already underway. Recently, the Transcontinental Gas Pipe Line Company (Transco) finished a new pipeline that will move natural gas to New York and New England. There is also the proposed 106-mile pipeline extension in Georgia and a number of reversal projects for pipelines leading from the Gulf of Mexico to the Northeast.
With new pipelines launched and flow reversals completed, availability of gas will improve and prices will likely drop, if all other factors remain unchanged, according to EIA industrial economist Michael Ford. This will have an impact mostly on power plants and industrial facilities that buy natural gas through the spot market, rather than through firm contracts with gas providers.
However, even with all pipeline projects competed, it is questionable whether pipeline capacity in the Northeast will be sufficient. At present all lines are working at full capacity, but a total of 1,300 new wells are being developed in the Marcellus Shale, February data from the EIA showed.