The difference between the Henry Hub national benchmark prices and natural gas prices in the Appalachian region has diminished, as more new projects and expansions are completed.
The difference in the first seven months of 2017 was about two thirds of the difference during the first seven months of 2016. So far in 2017, prices at the Henry Hub in Louisiana and at Dominion South in southwestern Pennsylvania differed by an average of $0.53 per million British thermal units (MMBtu). The difference as compared to other Appalachian price points followed similar trends.
More pipeline projects were completed starting in October 2016, including the Equitrans expansion of the Ohio Valley Connector and the Rockies Express Pipeline Zone 3 Capacity Enhancement. This increased pipeline capacity likely contributed the reduction of the difference between the Henry Hub and Dominion South price points, which reached $0.49/MMBtu at the end of 2016.
Over the first four and one-half months of 2017, the price difference dropped to an average of $0.33/MMBtu.
The difference has since increased, but 7.2 billion cubic feet per day (Bcf/d) of additional takeaway capacity from 25 projects in the region may drive it to drop again. Production in the Marcellus and Utica shale plays increased by 0.9 Bcf/d between the start of this year and July to reach a total 24.1 Bcf/d.
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