ICF Predicts Marcellus/Utica Gas Will Double by 2025!

doubleYou just can’t get away from the Marcellus/Utica–even at a conference supposedly focused on the Western U.S. Natural gas infrastructure was a key topic at the recent LDC Gas Forum Rockies & West conference held in Denver, CO. ICF International vice president Kevin Petak was one of the speakers. He dropped what is (to us) a bombshell when he said he believes the Marcellus and Utica combined will pump out 40 billion cubic feet per day (Bcf/d) by 2025–just 10 short years from now. The two plays combined today are pumping around 21 Bcf/d–so Petak is predicting our output will double! If that’s so, there will need to be a whole lotta drillin’ goin’ on between now and then. In addition to Petak, Crystal Heter, vice president for commercial operations at the Rockies Express (REX) pipeline, had some VERY interesting things to say about the REX pipeline reversal which sends Marcellus/Utica gas to the Midwest. It looks like even more gas is about to go from our area westward…
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Indiana NatGas Electric Plant Seeks Permission to Double Size

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St. Joseph Energy Center – artist’s rendering (click for larger version)

For years there had been a plan to build a new natural gas-fired electric plant near the town of New Carlisle, Indiana. The original plan, called the St. Joseph Energy Center, was to build a $500 million, 700-megawatt plant, to be fed by gas “coming from Canada, the West and the Gulf of Mexico.” The plant had a groundbreaking this spring. However, plans are changing. The developer wants to double the size of the plant to 1,400 megawatts. There has been no mention of Marcellus/Utica gas feeding the plant, but our own speculation is that a lot has changed since this plant was first planned. One of the big changes has been a reversal of the Rockies Express (REX) pipeline, owned by Tallgrass, which now flows gas from the Marcellus/Utica west to Illinois (right through Indiana) delivering northeast gas to the Greater Chicago area, where this plant will be built. So that has MDN wondering if the St. Joseph Energy Center will get some yummy northeast gas to power it (the reason why we’re highlighting this story)…
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REX Buying Back Another 25% of Pipeline from Sempra

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REX Pipeline map – click for larger version

Tallgrass Energy, builder and operator of the mighty Rockies Express (REX) Pipeline issued their first quarter 2016 update yesterday. Among the interesting bits of news in the update is that Tallgrass is buying out Sempra Power & Gas’ 25% ownership interest in REX. Sempra Power & Gas is a subsidiary/division of Sempra Energy. Just last month Tallgrass bought out Sempra Energy’s existing ownership stake in REX for $440 million (see Tallgrass Buys Out Sempra‚Äôs Portion of REX Pipeline for $440M). Apparently a division of Sempra still owned a large stake in the pipeline, and now Tallgrass is buying out that interest as well. REX is a 1,712-mile pipeline which runs from Colorado and Wyoming to Ohio, originally built to flow western natural gas to the Midwest and East. But then the Marcellus/Utica took off like a rocket and all of a sudden there was no market for western gas in our neighborhood. So Tallgrass reversed the flow for part of the REX (see Rockies Express Pipeline Reverses Flow from Utica to Midwest). Tallgrass turned what could have been a company-killing decision into the crown jewel asset of the company, simply by reversing the flow. Here’s the 1Q16 update from Tallgrass…
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Tallgrass Buys Out Sempra’s Portion of REX Pipeline for $440M

Just a few years ago that Tallgrass Energy, majority owner of the Rockies East Express (REX) pipeline–a 1,712-mile pipeline which runs from Colorado and Wyoming to Ohio–had an “Oh crap!” moment. The pipeline was built to bring then-abundant natural gas from the West to markets in the Midwest (like Chicago) and the East–via connections with other pipelines. Then the Marcellus and Utica happened, forever changing the natural gas dynamic in the United States. Nobody in the Midwest and East wanted western gas anymore. What to do?! Tallgrass knows how to pivot, and pivot they did–deciding to reverse the flow for a portion of the REX pipeline (see REX Reverses Pipeline Flow from OH for Mystery Utica Customer). Their bright idea worked, and beginning last August, the REX pipeline from Monroe County, OH to Mexico, MO reversed its flow (see 1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1). What was a huge negative turned into a big positive for Tallgrass. Now Marcellus/Utica rides the pipeline west every single day–and there’s no sign of it letting up. If anything, REX will reverse more of the line at some point. That got Tallgrass to thinking, maybe REX had become the crown jewel of the company. So Tallgrass has decided to buy out one of partners in REX, Sempra Energy, to the tune of $440 million…
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Reversed REX Pipeline from Marcellus/Utica to Midwest Will Expand

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Click map for larger version

On August 1, the Rockies Express Pipeline reversed its direction on a portion of the pipeline called Zone 3 and began flowing 1.8 billion cubic feet per day (Bcf/d) of Marcellus and Utica Shale gas to the Midwest (see 1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1). REX Zone 3 stretches from Clarington, OH to Mexico, MO (see the map). Further good news. The Federal Energy Regulatory Commission (FERC) has granted a favorable Environmental Assessment (EA) for REX to beef up capacity along Zone 3 by expanding two existing compressor stations and building three new compressor stations along the Zone 3 section. We also know who got the contract to build it…
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1.8 Bcf/d of Marcellus/Utica Gas Heads West on REX Starting Aug 1

U-TurnSomething really big is about to happen in the Marcellus/Utica region. Starting August 1, the Rockies Express Pipeline (REX), originally built from Colorado and Wyoming to Monroe County, OH to bring natural gas from west to east, will reverse the flow for a large and important section of the pipeline. On August 1, the section of REX from Monroe County, OH to Mexico, MO will reverse the flow and 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. This flow reversal has the power to a) increase prices northeast drillers receive for their natural gas, and b) lower the cost of natural gas for consumers (and industrial companies, and electric generating plants, etc.) in places like Chicago. It is a win/win scenario. It is so important, and will have such a profound affect on natgas prices in the Midwest, that our friends at NGI’s Daily Gas Price Index have created a “REX Tracker”–a free daily chart updating the price of natural gas along the REX’s Zone 3 section…
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