The Marcellus Natural Gas Monster is Choking On Insufficient Transmission Pipelines

America's Biggest Shale Gas Field Is Choking on Its Own Supply

The flow of natural gas from the nation’s biggest reservoir is close to dropping below last year as pipeline capacity fails to keep up with surging production. 

For the first time since the shale boom began in 2007, output from the Marcellus shale basin in Pennsylvania and West Virginia is faltering. While Appalachian pipeline capacity will more than double this year, it’s not happening quickly enough to keep the flow moving freely, according to Bloomberg New Energy Finance. 

Marcellus production has surged more than 14-fold in the past eight years. Now, drillers are awaiting seven new Appalachian pipeline projects scheduled to enter service this quarter, with eight more scheduled for 2016, according to Range Resources Corp., a Fort Worth, Texas-based producer active in the Marcellus. 

“The Marcellus is now totally infrastructure-constrained,” said Charles Blanchard, an analyst at BNEF in New York. “All through 2015, it couldn’t manage to get any incremental production out.” 

How 2015 is looking compared with previous years

Gas has tumbled 13 percent this year as mild weather limits demand and stockpiles approach a record. Without declining production and rising consumption by power plants, the price slump might have been even more pronounced. 

Marcellus gas production may slip 1.3 percent in November to 15.892 billion cubic feet a day from October, compared with 15.699 billion a year earlier, according to the U.S. Energy Information Administration’s monthly Drilling Productivity Report. Output is poised to drop for four straight months. 

Even as the dearth of pipelines prevents some supplies from reaching high-demand markets, gas production is still set to climb this year, and there’s a chance it won’t dip below 2014 levels. 

“We’re on the cusp,” Blanchard said. ”But you have new pipelines coming in. Everyone hopes to finish these projects before the heating season in November.”