Gas Market Near Tipping Point as Imports to U.S. East Fall

  • Natural gas imports to Northeast at lowest in at least 8 years
  • U.S. will become net gas exporter by 2017, Credit Suisse says

For proof that the U.S. is about to become a net exporter of natural gas, take a look at what’s happening in the Northeast.

The region extending from Maine to New Jersey and Pennsylvania has been a net-exporter of gas at times this year, pushing average pipeline imports from other parts of the U.S. and Canada to just 0.3 billion cubic feet a day in 2015, according to data provider PointLogic Energy. That would be the smallest amount for any year in figures going back to 2007, if the trend persists.

The data underscore how the flood of gas from the Marcellus and Utica shale formations in the eastern U.S. is transforming the country’s role in the global market. Net U.S. gas imports have slumped to the lowest in decades, and Cheniere Energy Inc. is preparing to ship the first cargoes of liquefied natural gas from the lower 48 states early next year.

“The Marcellus has really come into its own,” said Dominick Chirichella, senior partner at the Energy Management Institute in New York. “There’s certainly no shortage of gas anywhere in the U.S now, and that means exports are around the corner.”

The U.S. is on course to become a net gas exporter in 2017, Jan Stuart, global energy economist at Credit Suisse Group AG in New York, said in a note to clients Wednesday. The country’s production may climb 6.3 percent this year to 79.58 billion cubic feet a day, reaching a record for the fifth consecutive year, government data show.

Collapsing Prices

Natural gas futures have collapsed under the weight of the supply glut. The heating fuel for next-month delivery is down 29 percent this year, heading for a second straight annual decline. In October, prices dipped below $2 per million British thermal units for the first time in three years. Gas for January delivery fell 2.3 percent to $2.015 Thursday on the New York Mercantile Exchange, the lowest settlement since April 2012.

Gas nominations for Cheniere’s Sabine Pass liquefied natural gas terminal in Louisiana surged to a record on Wednesday, data compiled by Ventyx show. The company has said it’ll start LNG production this month and ship the first cargo about four to six weeks after that.

“We’ve seen the Northeast reaching unprecedented production levels,” said Gene McGillian, a senior analyst and broker at Tradition Energy in New York. “It’s a huge turnaround for U.S. gas supplies.”

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