Natural Gas Pipeline Expansion Project

The U.S. natural gas industry is undergoing significant changes. Domestic production has grown substantially over the last 8 years brought on by unconventional extraction techniques in shale basins, particularly in the Marcellus and Utica. However, this momentum is slowing as some major drillers find themselves underwater. Demand for natural gas for power generation, industrial use, and export is also increasing, with much of the growth concentrated in the Gulf Coast and Southeastern United States. To capitalize on these changes, the domestic pipeline network requires significant reconfiguration and expansion in order to move molecules form growing supply centers to growing demand centers.

As a leading energy market analytics company, the client was interested in gaining a sharper understanding of how the U.S. natural gas industry (upstream, midstream, and downstream) are responding to these developing changes and what the key market drivers will be in the future.

To accomplish this, the team analyzed recent historical upstream, midstream, and downstream market and industry dynamics to form a deep understanding of each sector. Subsequently, the team took a whole-of-industry approach to assess how these sectors would take shape over the medium-term. The team concluded that the new midstream projects that will increasingly link the Northeastern supply centers with growing demand nodes (emphasizing the Gulf Coast) will ultimately drive down natural gas hub price differentials; however, the trajectory of this convergence in prices will be anything but smooth and predictable due to the significant changes in infrastructure that will take shape over the next four years.