August 26, 2016

Utica Shale Developers Need Rover Pipeline to Transport to Market

Natural Gas Intelligence recently reported on natural gas development in the Utica Shale in Southeast Ohio. While production in this region has remained steady, and even increased in the case of dry gas, construction of the necessary midstream infrastructure to carry those resources to market have not kept pace. This “takeaway capacity” is critical to preventing a bottle neck in the supply chain and to ensuring that gas prices remain stable throughout the region. The Rover Pipeline is one project that would address these potential issues by transporting natural gas from distribution hubs to end markets in Ohio, Michigan, and West Virginia. According to the article:

Antero Resources Corp., which is heavily focused on rich gas production in the Marcellus Shale, has also said its dry Utica properties remain heavily tied to takeaway capacity. Earlier in the year, CEO Paul Rady told analysts that the company’s ability to access premium markets for the dry Utica is tied to the Rover Pipeline, which is scheduled to be in service by mid-2017, limiting what Antero can do in the area for the time being.

Additionally, Nancy Buese, Chief Financial Officer of MPLX Energy Logistics, commented about the Rover Pipeline last month during a call to discuss the company’s second quarter operations:

“In the Utica, what’s really going on there is sort of the macro environment slowing the rate of growth for producer customers; they’re really motivated by the ultimate netbacks up there, … And we’re still seeing very strong upstream economics for them, but the pace of drilling is really, for them, focused on the downstream pipeline projects … like Rover and some of those things.”

This amount of industry support demonstrates the pressing need for the Rover Pipeline and added midstream infrastructure in the Ohio Utica region. Delays on the part of federal regulators in approving these projects create a number of impacts on the energy industry at large, not to mention preventing businesses, manufacturers, and a number of other end users from enjoying the benefits of affordable, domestically-produced natural gas.