The Difference One Utica Pipeline Can Make on Gas Prices

What happens when you build a major interstate natural gas pipeline–and you’ve guessed wrong about the market. That happened to Tallgrass Energy and their Rockies Express Pipeline (REX), which runs from Colorado and Wyoming in the West to Ohio in the East. The REX Pipeline was completed in 2009, just in time for the shale revolution to begin in the Marcellus and now in the Utica. What to do when you’re pumping gas into a saturated market? You reverse the flow (see Reversing the Fortunes for “Wrong Way” REX Pipeline). On August 1, 2015 the section of REX from Monroe County, OH to Mexico, MO (called Zone 3) reversed the flow and began to carry 1.8 billion cubic feet per day (Bcf/d) of Utica and Marcellus Shale gas to the Midwest, including to the greater Chicago area. In January 2017, REX completed the reversal project and now flows 2.6 Bcf/d of Marcellus/Utica gas to the Midwest (see REX Pipe Completes Expansion Today, 2.6 Bcf/d Flowing East-to-West). The ace researchers at Natural Gas Intelligence have been looking at prices Utica drillers were able to get for their gas at key locations before and after REX reversed the pipeline and have found that single pipeline has “erased” the price differences between Utica and Marcellus gas. That is, Utica drillers now fetch much higher prices for their gas, everywhere they sell it (in Ohio and out), because of the REX pipeline and the new markets it has opened up…

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