The REX Zone 3 pipeline project is set to be operating by August 1st and will allow for additional gas to flow west out of Marcellus/Utica to the Midwest. With no increased demand in sight for the Midwest, this low-priced gas coming out of Marcellus/Utica will replace more expensive gas coming from Midcon and east-flowing Rockies. This should lower the cost of gas at Chicago Citygate as well as other pricing points throughout the Midwest. Waiting to procure natural gas in the Midwest may allow for better pricing in the next couple months as we start to see the exact impact on pricing.
Changes in the flow of gas and its pricing implications could be seen as far away as the West Coast. Natural gas from the Rockies may be redirected from the Midwest to other western states. The Northeast, which gets a large amount of gas from Marcellus/Utica, is not expected to see much of an impact. There is plenty of supply in the Marcellus/Utica shale fields and Northeast pricing is more driven by the constraints in transporting the gas to high demand areas.
The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.