2016 a bounce back year in the Appalachian Basin
Many viewed 2016 as a bounce back year for the oil and gas industry. Last year opened with 51 rigs operating in Ohio, Pennsylvania, and West Virginia (the “Tri-State Region”), and added eight throughout the year to close at 59 operating rigs.
The winter of 2015-2016 was one of the warmest on record and caused the price of natural gas to dip to nearly $1.50/MMBtu in March of 2016 before bouncing back to close the year over $3.50/MMBtu. In December of 2016, Henry Hub spot prices averaged $3.59/MMBtu as inventories fell below the five-year average. December marked the first time the Henry Hub price averaged more than $3/MMBtu for a month since December 2014.
The prolific amount of dry gas in the Appalachian Basin allowed the industry to push through the downturn that many oil and wet gas producers have suffered. As you can see from the graph below, Marcellus and Utica shale production from the Appalachian Basin accounted for nearly half of the dry shale gas production in the United States for the year.
2016 state-by-state permitting activity
- Gulfport Energy Corporation – 57
- Ascent Resources Utica LLC – 39
- Chesapeake Exploration LLC – 39
- Antero Resources Corporation – 36
- Rice Drilling D LLC – 26
- EQT Production Company – 227
- Range Resources Appalachia LLC – 164
- SWN Production – 157
- Rice Drilling B LLC – 106
- Cabot Oil & Gas Corporation – 77
- The Rover pipeline could transport 3.25 Bcf/d to Ohio, West Virginia, Michigan, and on into the Dawn Hub in Ontario, Canada. Expected to be in service by mid-2017.
- The Leach Xpress seeks to add 1.5 Bcf/d of takeaway capacity to serve customers on the Columbia Gas and Columbia Gulf pipeline systems. Expected to be in service in the second half of 2017.
- The Nexus Gas Transmission project will deliver 1.5 Bcf/d of supplies to markets in Ohio, Michigan, the Chicago Hub, and the Dawn Hub in Ontario. Nexus has a targeted completion date of fourth quarter of 2017.
- The Mountaineer XPress will transport 2.7 Bcf/d to markets on the Columbia Gas Transmission system, including to customers in western West Virginia, TCO Pool, and other mutually agreeable points. Columbia anticipates initiating construction in the fall of 2017, with a targeted in-service date of October 31, 2018.
- The Mountain Valley pipeline would provide at least 2 Bcf/d of firm transmission capacity to markets in the Mid- and South-Atlantic regions of the United States. Mountain Valley anticipates a mid-year 2017 construction start date, with an estimated in-service date during the fourth quarter 2018.
- The Atlantic Coast pipeline would have a capacity of 1.5 Bcf/d to run gas from Harrison County, WV, to Greensville County, VA, and then south into eastern North Carolina. Construction is expected to begin in the fall of 2017 with an estimated in-service date in fourth quarter of 2019.
- The Atlantic Sunrise expansion project would transport about 1.7 Bcf/d to markets in the Mid-Atlantic and southeastern U.S. The pipeline should be in-service by mid-2018.
- The PennEast pipeline will transport 1 Bcf/d from Dallas, Luzerne County, in northeastern Pennsylvania, and terminate at Transco’s pipeline interconnection near Pennington, Mercer County, New Jersey. PennEast expects to begin pipeline construction in 2018 and take approximately seven months to complete it.