One Slice of Global Gas Market Just Got Bigger for U.S. Drillers

(Bloomberg) -- Shale drillers in the U.S. are about to tighten their grip on the global natural gas market.

TransCanada Corp.’s decision this week to shelve plans for lower tolls on its gas pipeline to eastern Canada means less supply will head there from the country’s western reservoirs. That opens the door for U.S. explorers like Antero Resources Corp. and Rice Energy Inc. to edge out Canadian competitors and ship more gas north of the border.

Canada is just one of many new frontiers for the shale producers propelling the U.S. into the ranks of the world’s top gas suppliers. Less than a decade after U.S. gas imports rose to a record, Citigroup Inc. data show the country has become a net exporter of the fuel as cargoes head from the Gulf Coast on tankers to ports across the globe.

“This makes it a lot easier for U.S. producers, knowing their Canadian counterparts aren’t going to compete,” Jihad Traya, a natural gas consultant for Solomon Associates in Calgary, said by phone Wednesday. Canadian drillers are “getting shut out of a market they might never get back.”

Drillers in Pennsylvania’s Marcellus basin, the biggest U.S. gas play, are poised to expand their reach in Canada’s population centers. Antero, Rice and Gulfport Energy Corp., which ships supplies from the basin to Midwest markets, stand to benefit the most from TransCanada’s move, Evercore ISI analysts Timm Schneider and Stephen Richardson said in a note to clients dated Wednesday.

TransCanada halted plans to lower rates on its mainline because there wasn’t enough interest from Western Canadian producers, the company said Tuesday. Those drillers now stand to lose even more market share to U.S. competitors, Martin King, an analyst at GMP FirstEnergy in Calgary, said by phone Wednesday.

“More U.S. gas is going to be feeding into southern Canada,” King said.

Proposed Pipelines

The decision raises the odds that the proposed Nexus pipeline, developed by Spectra Energy Corp. and DTE Energy Co., or the Rover project led by Energy Transfer Partners LP, will allow Marcellus gas to displace Canadian supplies, King said.

Gas for delivery in Alberta traded about 50 cents below the U.S. benchmark Henry Hub price Wednesday. Canadian explorers Pine Cliff Energy Ltd. and Paramount Resources Ltd. may be hit hardest if that gap widens, while Seven Generations Energy Ltd. may be shielded by its hedging program and capacity on the Alliance pipeline to the Midwest, Juan Jarrah, an analyst at TD Securities Inc., said in a note to clients Thursday.

While some western Canadian producers are banking on a better pipeline deal from TransCanada, that offer may never come, Traya said.

“The industry in western Canada is cutting off its nose to spite its face,” he said.

Copyright 2017 Bloomberg News.

WHAT DO YOU THINK?

Click on the button below to add a comment.
Post a Comment
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Related Companies
 Company: TransCanada Corporationmore info
 - Regulator Should Have Final Say on Canada Energy Projects -Panel (May 15)
 - TransCanada Keystone XL Shipper Talks Complicated, CEO Says as Profit Up (May 5)
 - Environmental Groups Sue Trump Administration for Approving Keystone XL (Mar 30)
 Company: Gulfport Energymore info
 - $2 Billion Gulfport Buy Shows Drillers Thirsting for Next Play (Dec 15)
 - One Slice of Global Gas Market Just Got Bigger for U.S. Drillers (Nov 17)
 - With American Energy Buy, Gulfport Grows Utica Footprint (Jun 10)
 Company: Energy Transfer Partnersmore info
 - Energy Transfer To Sell 32% In Rover Pipeline Entity To Blackstone (Jul 31)
 - ETP's $4B Rover Line Hits Another Snag, This Time In W. Virginia (Jul 24)
 - BLOG: Federal Court Ruling Resurrects Dakota Access Pipeline Battle (Jun 15)
 Company: Spectra Energy Corp.more info
 - FTC Approves Enbridge Deal To Buy Spectra With Conditions (Feb 16)
 - One Slice of Global Gas Market Just Got Bigger for U.S. Drillers (Nov 17)
 - UPDATE: Western Pennsylvania Natgas Pipeline Explodes, Injuring One (Apr 29)
 Company: Antero Resourcesmore info
 - One Slice of Global Gas Market Just Got Bigger for U.S. Drillers (Nov 17)
 Company: Rice Energy Inc.more info
 - Jana Says EQT Can Save $4.5B By Scrapping Rice Energy Deal (Jul 5)
 - Deal Of The Month: EQT, Rice Energy Merge in Mega Marcellus $6.7B Gas Deal (Jun 30)
 - One Slice of Global Gas Market Just Got Bigger for U.S. Drillers (Nov 17)
 Company: DTE Energymore info
 - One Slice of Global Gas Market Just Got Bigger for U.S. Drillers (Nov 17)
Events  SUBSCRIBE TO OUR NEWSLETTER

Our Privacy Pledge
SUBSCRIBE



Most Popular Articles

From the Career Center
Jobs that may interest you
Senior Flarestack Operator
Expertise: Pipeline Operator|Pipeline Services|Well Servicing & Testing
Location: Pennsylvania, PA
 
Sr. Plant Operator - Ramsey Gas Plant
Expertise: Gas Plant Operations|Process Technician|Refinery / Plant Operator
Location: Orla, TX
 
Plant Operator - Ramsey Gas Plant
Expertise: Gas Plant Operations|Refinery / Plant Operator
Location: Orla, TX
 
search for more jobs

Brent Crude Oil : $51.03/BBL 1.51%
Light Crude Oil : $47.09/BBL 0.66%
Natural Gas : $2.93/MMBtu 1.38%
Updated in last 24 hours