Bigger wells, smaller markets: United States gas long-term outlook H2 2016
Wood Mackenzie's North American Gas Service releases its United States Gas Long-Term Outlook H2 2016. In it, our analysts discuss the strong fundamentals we see this year driven by increasing export demand and bottlenecked Northeast supplies. In the medium term, new Northeast pipeline capacity—delayed and scaled back relative to developers’ plans but massive nonetheless—debottlenecks enormous amounts of low-cost supply. Northeast supply grows about 12 bcfd between 2017 and 2020. Moreover, Permian breakevens have continued to fall, so even a modest recovery in oil prices will again mean growth in associated gas production. North American demand growth remains strong, but these two low-cost supply sources push Henry Hub prices to less than US$3.25/mmbtu by year-end 2018 and an average of about US$2.85/mmbtu in the 2019-23 period.