North America’s midstream is in the middle of profound change as its operators rebuild and add new assets. The cause is well known: production from the rapidly growing shale plays that’s overwhelming current infrastructure, E. Russell “Rusty” Braziel, president of RBN Energy LLC, told Hart Energy’s DUG Permian conference in Fort Worth.
“There isn’t enough infrastructure to get it (oil and gas) to market,” Braziel said. He began his presentation by tracking natural gas output from 2005 into 2013, a time when North America’s gas production jumped by an astounding 16.2 billion cubic feet (Bcf) per day. “Gas production is now at an all-time high,” he added, approaching 65 Bcf per day and still growing.
To emphasize the impact of the shale plays, Braziel pointed out conventional gas production actually declined during the period, “and growth in the Northeast has made up for that decline,” he said, calling the growth “astronomical” and projecting that “the Northeast U.S. can be self-sufficient in gas by 2017.” He said Northeast gas production will reach 18 Bcf per day by 2017.
But as impressive as the climb in that production from the Marcellus and Utica has been, it could be far larger were it not for a big backlog in well completions and completed wells waiting to go on production. Fracing crew and pipeline constraints have created the backlog, he said.
That backlog will create much of the production increase expected in the near future.
Braziel expects the recent trend in pipeline repurposing to continue. Look for continued flow reversals and/or conversion to other products, he said, adding there will be a continuing need for this “re-plumbing” of existing pipelines and storage to handle the change. The trend is in addition to an equally impressive newbuild capacity.
“More gas means more NGLs to be processed,” Braziel pointed out. He projected NGL production of 2.2 million bbl. per day will swell to nearly 3.6 million bbl. per day by 2017.
Increased use of gas to fire power generation will absorb some of the increase in production, but North America will have to look abroad for markets, he said, adding, “We have turned into an export market” for gas, gas liquids, crude and petroleum products, whether the U.S. and Canada want it or not. The challenge will be summoning the political will to overcome years of energy protectionism so export markets can flourish.
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