Marcellus Shale Production Impacting Pipelines

Marcellus Shale Production Impacting Pipelines

The Marcellus Shale has been a large producer of natural gas in the last few years.  In Texas and other southern states where gas production was previously used to supply the Northern states, the demand for their gas from the North has been declining.   With the Marcellus Shale producing plenty to provide natural gas for the entire region, the gas previously moved from the South to the North is no longer needed.  This shift has had an impact on a number of markets and pipeline operators.

Marcellus Shale Pipeline Operators

Pipeline operators in the Marcellus Shale are continually adjusting their infrastructure to account for changes in the flow of gas.  The gas that was previously moved from South to North is now starting to slow in the opposite direction and pipeline operators are struggling to change quickly enough to keep up with the change.   When you combine this change with the continuing polar vortex that is affecting the Northeast, keeping the pipelines operating in the most efficient way is becoming more difficult.

Marcellus Shale Share of US Production

The total share of natural gas production from the Marcellus has been increasing rapidly in the last few years.  In 2010 the Marcellus produced less than two BCF/d but it now provides as much as 18% of the total U.S. Natural Gas production.  With the increasing supply coming from the Marcellus Shale, other parts of the country are starting to depend on the Marcellus to supply their natural gas and keep prices from skyrocketing.   With the Marcellus becoming an increasingly important part of U.S. supply, pipeline operators are scrambling to build infrastructure in the region to handle transportation needs.  The pipeline infrastructure required to handle the increase in gas production will take time to complete but the result will be increased jobs and a positive economic impact in the region.

Impact on Marcellus Mineral Owners

The impact on mineral owners is that the Marcellus Shale production impacting pipelines will cause potential delays in royalty payments.  Royalties can’t be paid until the appropriate infrastructure is in place and the gas can be brought to market and sold.  As a mineral owner, you will want to understand what pipelines are available around your property so that you can be aware of any potential delays in royalty payments.  In addition, landowners need to be aware that they may be approached to have pipeline across their property.  It’s important negotiate the best price you can get for any damages while also ensuring that your land is not negatively affected from the pipeline long term.