Growth in gas production in the biggest generating regions in the United States is to the decline due to the lack of adequate pipeline network, as costs soar at home alongside a major uptick in LNG exports destined for gas-thirsty European countries.
Since Russia’s invasion of Ukraine in late February, U. S. natural gas prices possess increased approximately 50%, Reuters reports, and producers within Appalachia and West Tx are now struggling with a lack of pipelines to move item to market
Appalachia accounted for 37% of total U. S. fuel production, while West Tx accounted for another 19%, Reuters said, citing a warning by Bank of The united states analysts that Appalachia was nearing the limits from the takeaway capacity, heralding any halt to production development.
In West Texas, home of the Permian shale play, pipelines will also be filling up quickly, according to Reuters.
The pipeline shortage could lead to even higher prices for natural gas, which topped $7 per million Uk thermal units on the spot market at the end of last month. May futures also expired in a price above $7 per mmBtu, the Energy Information Management (EIA) reported last week. Natural gas prices stood at $7. 250 during the time of writing (8: 18am EST).
The timing of this pipeline shortage provides Europe is seeking options to Russian gas, with U. S. LNG the most well-liked replacement. Currently, the U. S. has the capacity to export 9. 8 billion cu ft daily, according to Reuters, whilst Europe’s largest economies transfer Russian gas at a rate of 18. 3 billion cu ft daily. Pandemic demand recovery for natural gas, pumpiing and energy shortages at home will affect American customers.
By Irina Slav just for Oilprice. com