EIA: Appalachian Natural Gas Prices Up Even As Production Jumps

According to the U.S. Energy Information Administration, natural gas prices at trading points around the Appalachia region have generally increased in the past three years relative to the benchmark Henry Hub in Louisiana, even as production in that area reached new highs. Natural gas production in the Appalachia region averaged 22 billion cubic feet per day (Bcf/d) in 2017, an increase of 25% from 2015 average levels. Latest data indicate that production has continued to increase, with production in the Marcellus and Utica plays reaching 25 Bcf/d in March 2018. Higher prices and production are mainly driven by the increased pipeline takeaway capacity from the Appalachia region.

Spot prices at market trading hubs in the Marcellus and Utica plays increased even as production growth has continued. During winter 2017–18 (October 2017 to March 2018), the price at the Dominion South Hub in southwest Pennsylvania averaged $2.17 per million British thermal units (MMBtu). In contrast, during the winter 2015–16, prices at the Dominion South Hub averaged $1.24/MMBtu. The average 2017 summer (April–September) price was $2.06/MMBtu, 68¢ higher than the 2015 summer average.