--> --> Abstract: Shale Gas: Advances in Technology and Impacts on Markets, by Porter Bennett; #90124 (2011)

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Making the Next Giant Leap in Geosciences
April 10-13, 2011, Houston, Texas, USA

Shale Gas: Advances in Technology and Impacts on Markets

Porter Bennett1

(1) Bentek Energy, Evergreen, CO.

The North American natural gas market has transformed over the last decade owing to the extreme growth in shale gas production. Shale gas will continue to exert a significant impact on U.S. and international markets, reducing the need for Canadian and LNG imports in the coming decade. The Marcellus shale has the greatest potential to create significant market disruptions since natural gas production from the Appalachian Basin could increase by two or three times in the next five years. Surging productivity from U.S. shale gas fields could curtail the need for natural gas imports for a decade or more and provide clean fuel to substitute for coal-fired power generation. Shale gas productivity gains are driven by advances in technology, experience and knowledge.

Along with the increase in production, numerous new west-to-east pipelines were installed to deliver natural gas to markets. New pipeline projects including the Rockies Express, Gulf Crossing, and Midcontinent Express helped to alleviate transportation constraints and serve to reduce price differentials by increasing relative prices in the West while dampening prices in the East. More than 30 pipeline expansion projects were proposed to support natural gas production growth, short-haul and long-haul pipeline transportation capacity and pipeline interconnections in the region. Realization of even some of these projects would enable Marcellus production to displace natural gas supplies from Canada, the Rocky Mountains, the Midcontinent and other producing areas. Northeast price premiums would be likely to and price spreads between the Northeast, western Canada and the Rocky Mountains could tighten.

In most natural gas producing regions, natural gas liquids (NGL), in particular ethane, are a highly-valued byproduct. NGL is sold as an important feedstock, often priced significantly higher than natural gas and hence helps to improve the profitability at the wellhead. Yet, in the Marcellus ethane is potentially a constraint if adequate processing and transportation infrastructure are not developed or if demand for ethane does not remain sufficiently robust.