There is a lot of debate about how big the Utica is going to be. Hard to determine as the E & P guys keep their cards tight to their chests. They say as little as possible most of the time. And the rumor mongers make it even more difficult to determine fact from fiction.
I ran across the earnings call from DTE, an electric utility that also has substantial pipeline activity. From what they stated, they are in discussions with several energy companies that are almost desperate to get more pipeline capacity to move Utica product. Apparently they believe that this will so huge that we don't have near the needed capacity.
From the call;
In the Utica, yes, I think we do continue to see strong, bullish, whatever you want to call it, results and here producers are talking about the scale of what is going to happen there and the scale is large and it will be constrained by infrastructure to get the gas to market, so they are now transitioning from evaluating the resource to believing that and now they got to get it to market.
The other thing you hear them thinking about is, what market and they are clearly places that take it that are better than others. A lot of it's been taken south to this point, but the basis to Michigan and Ontario if you watched in the recent year was strong, and those are growing markets. Demand for gas in Ontario is growing same is true in Michigan, particularly as we transition our generation fleet. Then our Vector Pipeline reaches into Chicago, Wisconsin and so forth, I think there is a lot of interest in reaching those markets with Utica gas.
There is much more there in the call. But I thought this is a good peak at behind-the-scenes activity that shines a strong light on the Utica future. Follow the link.
http://seekingalpha.com/article/2023141-dte-energys-ceo-discusses-q...
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I'm curious as to the bigger picture for the electrical generating utilities.
I've had the idea for some time that a stable pricing and delivery structure for natural gas
(methane) would finally break the coal companies' exclusive relationship with these utilities.
Power generation would become more regionalized than it is now and use gas powered co-generators instead of monster coal-fired boiler/steam turbines.
It would be up to shale developers to prove they can do the job over 30-40 year timeframes.
I could imagine all of this would put a really solid, longer-term value on methane gas as a viable investment in and of itself for shale drillers.
Remember Aubrey McClendon said he disliked coal as a power-generation fuel.
And there is a LOT of coal-fired generating capacity within 150 miles of this entire Utica
play just waiting for a viable alternative to coal.
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