Dan Markind offers a candid assessment of the confusion surrounding American natural gas development as political demagogues and industry problems aggravate.

The eternal state of confusion surrounding natural gas development in America continues unabated. As events play out domestically and internationally, the absurdities manifest themselves.

Despite enormous obstacles and the inexplicable missteps of the gas industry, the pipeline buildout continues. One measure of this is that the discount at which gas is sold at Henry Hub in Louisiana has dropped to its lowest level in five years when compared to the price at the Dominion South hub in Western Pennsylvania. So far in 2018 it has averaged 49 cents. For 2017 the differential was 85 cents and in 2016 approximately $1.

Gas sells at a premium in Pennsylvania because of the difficulty in getting the gas from the ground to market. With more pipelines being built, more gas can flow in Pennsylvania and the price differential decreases.

The premium is larger for gas coming out of Northeastern Pennsylvania, which actually is where the best wells are located and which is closest to gas-starved New England, because the pipeline system from the Northeast is even more spotty. Hopefully, as Atlantic Sunrise gets completed that differential also will lessen. Thanks to the pipeline buildout, in February the industry produced 27 bcfd of gas from the Marcellus/Utica region, representing a third of entire national output.

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http://naturalgasnow.org/eternal-state-confusion-surrounding-american-natural-gas-development/