Appalachian dry gas pricing and midstream

Midstream assets are in demand  The amount of material that needs flow through to a diversified set of end users out of the Marcellus and Utica is massive.  The DOE projects another $300B +/- needs to be spent on energy infrastructure within the next 10 years.  For the Marcellus land owners, Q1 2016 is a big inflection point where infrastructure capacity out strips production growth.  What does this mean?  It means the oversupply conditions that are suppressing Henry hub gas to sub $4 and Appalachian dry gas almost $1.00 cheaper will be alleviated as more material will flow out of the area and to the massive LNG facilities coming on line in 2015-2016 in LA/MS.  Hopefully results an inflection point in the pricing.

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Permalink Reply by Philip Thackray on September 21, 2014 at 7:09am

Patrick,

I hope you are right.  Do you have a link(s)? 

I would have put the inflection point a couple of years further away although I have no hard analysis to point to.  My opinions are heavily influenced by the articles I have been reading here over the last year or two.  Unfortunately the archived articles more than a month old are only available to subscribers and the subscription is $75 per month.

Regards,

Phil

Permalink Reply by Patrick Donnelly on September 21, 2014 at 8:34am

Philip i work for a major investment manager.  I have a good report that I can provide.  I tend to remember data graphically so ill provide you some eye candy to help you visualize the inflection.  We have a lot of energy execs and PA/OH landowners as private wealth clients recently hence my presence on the site.  I learn from you folks as much as any investment reporting although I do have access to reams of data.  ill provide tomorrow when i get back to the office.  

Permalink Reply by Philip Thackray on September 21, 2014 at 9:01am

Patrick,

RBN energy is a great source of information.  As a professional you might want to subscribe.

Anything you can share would be most appreciated!

Phil

Permalink Reply by Patrick Donnelly on September 21, 2014 at 9:29am

Absolutely Phil.  I work for Morgan Stanley in Boston for a large the private wealth management group.  We have a huge energy research department in NYC.  Please give me specific areas of interest?  Ill start with midstream infrastructure data in the Marcellus/Utica shales and nat gas pricing projections?  

Permalink Reply by farmgas on September 21, 2014 at 11:56am

Thanks Patrick....what would you contribute to the central PA area including Indiana, Westmoreland and Jefferson Counties?  Any infrastructure projects coming our way?

Permalink Reply by Patrick Donnelly on September 22, 2014 at 12:46pm

I have a large PDF but feel more comforatble senidng it via email to a targeted group. I sent to a few members.  Email me at  Patrick.f.donnelly@morganstanley.com.  Please mention this site in the header and ill send it along.  Thanks.

Permalink Reply by Philip Thackray on September 22, 2014 at 1:25am

Patrick,

I'm a landowner in Southern Butler County PA.  This area is generally considered a "stacked pay zone" consisting of the Marcellus, Burkett and Rhinestreet which are "wet" and the Utica which is dry here.  Commodity prices are the principal driver for the economics of these shale layers.  At current prices the Marcellus and Burkett wells in this area seem economic but not through the roof like some of the wells in say Washington County, PA or the Ohio Utica "pickle" wells.  Locally, the Rhinestreet is being drilled by Rex Energy but that well is not in production so the jury is out on the Rhinestreet.  The economics of these "wet" wells is highly dependent on methane and NGL prices as their IRRs are not stellar.  The Utica (locally) has been productive but again they haven't been gushers.  XTO just completed a Utica and I see where Rex has permitted a couple of Utica (Point Pleasant) wells, the results of those wells will be interesting.  Still, from what I have seen, I don't think that the Utica in this area is economic at $4.00 methane.

So for local landowners price, price, price is the thing of interest given the moderate EURs for these local wells.  On the plus side, the mid-stream in this area is well fleshed out with a lot of current and pending cryogenic capacity and access to fractionation facilities.

So my main interest is future commodity pricing - methane, and the NGLs up to and including C4 (local wells have very little condensate).

Thanks in advance,

Phil

Permalink Reply by Barry D on September 21, 2014 at 11:26am

Patrick,

Thank you for signing on and becoming a member.

I look forward to the information you will present.

Permalink Reply by Patrick Donnelly on September 22, 2014 at 12:36pm

Barry pls email me at  Patrick.f.donnelly@morganstanley.com.  Please mention this site in the header.  Thanks.

Permalink Reply by Jim Litwinowicz on September 22, 2014 at 2:23am

Patrick, looking forward to whatever info you can share. Stranded gas is a serious problem, especially in counties like Venango, Clarion, Clearfield, Potter, and McKean.  Low prices are keeping away gas companies and hurting landowners.  Gas prices there are very depressed and new pipeline capacity would be a big improvement.

Permalink Reply by Patrick Donnelly on September 22, 2014 at 2:39am

Absolutely fellas.  This is an incredible site with so many highly informed, serious-minded poeple that are generous with their time and knowledge.  I hope to be a contributing member and have continuously evloving exchanges that are mutually beneficial.  I have a large PDF but feel more comforatble senidng it via email to a trageted group. 

 

My email is Patrick.f.donnelly@morganstanley.com.  Please mention this site in the header.  Thanks.

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