Based on several studies, the midstream sector will require at least an additional investment of $17 billion by 2020 to bring rising supplies of Marcellus shale natural gas to markets in the northeast U.S., a senior executive told an audience at Hart Energy's Developing Unconventional Gas East Conference and Exhibition in Pittsburgh.

Randy Crawford, senior vice president of EQT Corp. and president of the midstream, commercial and distribution division, said that midstream infrastructure is the critical link to moving natural gas to critical markets.

"Natural gas is fast becoming the world's dominant fuel of this century. It is our future," he said.

Only five years ago, many energy analysts believed the U.S. was facing a potential shortfall of natural gas, and the industry responded by building several LNG import terminals to offset this expected shortfall. But since the development of the technology to draw natural gas out of shale formations, the U.S. market has been flooded with additional supplies of natural gas. Prices have flattened as a result.

The Marcellus shale is a large part of the shale revolution, with an estimated 489 Tcf of natural gas, the second largest gas field in the world, at the doorstep of the biggest market in the world. Current production from the Marcellus is around 4 Bcf per day. Many analysts expect production from the Marcellus to double to 8 Bcf per day by 2014 and to increase to around 11 Bcf by 2015.

Crawford said the impact of this significant amount of incremental supplies of natural gas on the U.S. market is clear. Natural gas prices have fallen relative to crude and their absolute price is less than half of that seen in Europe.

Since 2008, Marcellus natural gas production has begun to rapidly displace from the northeastern U.S. a growing portion of the supply from the Gulf coast and Rocky Mountains. By 2015, Marcellus production will be capable of displacing all other sources of natural gas heading into the Northeast, making the development of the midstream sector in the region critical, he said. To make this transformation possible, the region needs a more developed north-south header system to link major interstate transmission lines.

"Preserving the environment is good business and, quite frankly, our neighbors expect and deserve thoughtful development plans," he said. In addition to expanding its header system, EQT has re-engineered its Equitrans system, a FERC-regulated pipeline that was originally constructed to transport natural gas into Pittsburgh. The pipeline now exports Marcellus natural gas to a broader market throughout the Northeast, Crawford said.

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