Improved takeaway capacity
The increasing growth in natural gas production from the Marcellus is constrained right now by the lack of available takeaway pipeline capacity to move it to new markets. Improved takeaway capacity could grow Marcellus production volumes for producers including Cabot Oil & Gas (COG).
Upcoming infrastructure projects in the Marcellus
The significant projects underway in the Marcellus include Williams Partners’ (WPZ) Atlantic Sunrise pipeline project, Moxie Freedom power plant, and Lackawanna Energy Center.
In a June presentation, Cabot Oil & Gas’s (COG) management confirmed that ~85% of the Atlantic Sunrise pipeline project was complete. Plus, the company also provided an update on the Moxie Freedom plant, which is expected to burn approximately 160 million cubic foot per day. Per COG’s June presentation, the plant is currently accepting test gas. Train 1 at the Lackawanna facility (capable of burning 80 million per day) came online recently. Trains 2 and 3 are scheduled for October and December, respectively.
Other upcoming pipeline projects that could significantly affect Marcellus volumes include the PennEast pipeline. Partners in this venture include NJR Pipeline (NJR), Spectra Energy Partners (SEP), and UGI Energy Services (UGI). Construction of the pipeline is expected to begin in 2018 with a target in-service date in 2019.
COG anticipates that these projects could play a key role in almost doubling its Marcellus Shale production (see the graph above) from 2.15 Bcf/d (billion cubic feet per day) in the first quarter to 3.75 Bcf/d.
COG’s peers in the Marcellus
COG’s peers in the Marcellus include Range Resources (RRC), Southwestern Energy (SWN), and EQT Corporation (EQT). RRC’s Appalachia production in the first quarter (which includes output from Marcellus, Utica, and Upper Devonian shale plays) made up 83% of its total production. Southwestern saw ~48% of its first-quarter production coming from the Marcellus. Around 81% of EQT’s first quarter production came from the Marcellus.