NatGas Grudge Match II: Marcellus vs Permian

Competition is good. Last week we told you about the coming competition between the Marcellus/Utica Shale play in Pennsylvania, West Virginia and Ohio, and the Haynesville Shale play in Louisiana (see NatGas Grudge Match: Marcellus vs Haynesville). The Haynesville was not so long ago dead–no new drilling. But that is no longer the case. The Haynesville is gearing up to compete against the Marcellus/Utica (or perhaps it’s the other way around?) to sell gas into the Midwest and along the Gulf Coast. The Marcellus/Utica is getting a flurry of new pipelines to make sales to other regions possible. But the Haynesville is not the only new competition coming for Marcellus/Utica. The Permian Basin shale play, located in Texas, is coming on super strong. Why? As we point out in today’s companion story about EIA’s June drilling report, drillers in the Permian are drilling new oil wells like crazy. Thing is, when you drill a new oil well, you don’t ONLY get oil–you get other hydrocarbons too, like natural gas and gas liquids (propane, ethane, butane, etc.). Because the Permian is drilling so many new oil wells, it’s also causing a flood of new natural gas into the market. The Permian is now the #2 natural gas producing shale play in the U.S., behind the Marcellus. What does this clash of the titans mean? According to one analyst, “Everyone can’t grow and everyone can’t win”…

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