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US gas pipeline shortage may drive energy diversity

Tuesday, January 6, 2015

Subject

The effects of natural gas pipeline supply constraints in the US North-east.

Significance

The shale 'revolution' has caused a sharp rise in US natural gas production, but it has been located in areas without gas infrastructure. Production has been concentrated along the Gulf Coast, and the pipeline network is oriented from that region to the North-east and Pacific North-west. Newer areas of energy production, such as Bakken in North Dakota, Eagle Ford in South Texas, and Marcellus in Appalachia, have poor connections to major markets, and constraints have led to pricing spikes in the North-east.

Impacts

  • The majority of proposed pipelines for the next several years target areas in the upper Midwest, Mid-Atlantic, and South-east markets.
  • Manufacturers in the North-east will face competitive disadvantage from paying the highest energy costs in North America.
  • Pipeline constraints will not dampen enthusiasm for liquefied natural gas (LNG) exports, especially out of West Coast ports.
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