American Shale Gas Selling for Over $7/Mcf to Overseas Buyers

A Bloomberg article caught our eye. It says natural gas being exported by Cheniere Energy (in southern Louisiana) is being sold to counties like Mexico, Japan and Jordan for over $7 per thousand cubic feet (Mcf). Why is that significant and how is it related to the Marcellus/Utica? It’s significant because gas right now is selling in the U.S. for an average of around $3/Mcf. In some places, like the Marcellus/Utica region, it sells for much less. Yesterday gas sold at the Tennessee Gas Pipeline Zone 4 Marcellus trading hub sold for $2.61/Mcf. If producers can sell their gas overseas at double the price–happy days are here again! How does that relate to the Marcellus/Utica? Some of the gas being sold by Cheniere comes from the Marcellus/Utica. And later this year, Dominion will have finished and will power up their massive LNG export facility in Cove Point, Maryland. When that happens, 100% of the gas exported will go to two countries: Japan and India. And it will likely be sold for prices like Cheniere is seeing–around $7/Mcf. That is really good news for the producers who have signed contracts with Cove Point…

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