Market Snapshot: Northeast U.S. pipeline expansions continue to impact Canadian natural gas exports

Release date: 2016-06-08

The northeast United States (U.S.) has traditionally been a key market for Canadian natural gas exports. In recent years however, increased U.S. production from the Appalachian Basin, which encompasses the Marcellus and Utica formations, has increasingly displaced Canadian exports. As of May 2016, combined production from the Appalachian Basin averaged almost 21 billion cubic feet per day (Bcf/d), a fourteen-fold increase since 2007. Over the same time period, Canadian natural gas exports to the northeast U.S. decreased from 2.8 Bcf/d to 0.9 Bcf/d.

The increase in Appalachian Basin production led to new pipeline projects and reconfigurations across North America. Flows on existing pipelines were also affected, such as on the TransCanada Mainline. Between 2007 and 2016, natural gas flows on the TransCanada Mainline from Alberta to eastern markets declined by almost half, from 5.7 Bcf/d to 3.0 Bcf/d.^Footnote 1

Sources and Description

Sources: U.S. Energy Information Administration’s Drilling Productivity Report; PointLogic Energy

Description: This combined line and area graph illustrates production from the Marcellus and Utica formations against TransCanada Mainline receipts from January 2007 to May 2016. Production increased from less than 2 Bcf/d in 2007 to roughly 21 Bcf/d in May 2016. Meanwhile, natural gas receipts at the TransCanada Mainline at Empress (located on the Alberta/Saskatchewan border and where the Mainline begins) decreased from approximately 6 Bcf/d in 2007 to approximately 3 Bcf/d in 2016.

Natural gas production in the U.S. is forecast by the U.S. Energy Information Administration to increase at a rate of 1.4 per cent per annum, increasing from 67 Bcf/d in 2013 to 97 Bcf/d by 2040. Several new pipeline projects are already under development to transport growing Appalachian Basin gas production to markets.^Footnote 2 As these projects come into service, they will allow more Appalachian production to move into traditional markets for Canadian gas in both the U.S. and Canada.

Note

Note 1

Throughputs increased starting in mid-2013 due to additional contracting following the Board’s RH-003-2011 decision [Folder 939799], which made changes to TransCanada’s tolls and transportation services. Throughputs also increased in response to higher polar vortex-driven demand during the 2013/2014 winter.

Return to footnote 1 referrer

Note 2

Four current infrastructure projects will continue to reduce U.S. reliance on western Canadian gas, and further enable the flow of Appalachian Basin gas into Canada itself. All projects are scheduled to be in service by 2017.

Energy Transfer’s Rover and Spectra’s NEXUS will transport Appalachian Basin production to markets in the U.S. Midwest and to storage caverns in Dawn, Ontario.
Along with the Iroquois Pipeline’s Wright Interconnect Project and SoNo Project, flows on the Constitution Pipeline will alter throughputs at the Iroquois export point and reverse it to become an import point into Canada. TransCanada estimates 0.4 Bcf/d of imports at Iroquois by 2018.
National Fuel’s Northern Access 2016 project involves the expansion of the existing Chippawa/Niagara import point from 0.65 Bcf/d to 1.0 Bcf/d.

Return to footnote 2 referrer

Date modified:: 2023-11-28

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Market Snapshot: Northeast U.S. pipeline expansions continue to impact Canadian natural gas exports