Winter is Coming
Winter is a sigh of relief for Utica producers, especially after the Dominion South spot price was trading at just $0.29/MMBtu on Oct. 1. Dominion South basis on Oct. 1 was a whopping -$2.55 behind Henry Hub, but basis has improved to -$0.47 behind Henry Hub this week as several pipeline expansions allowed producers to move production out of Ohio to the Midwest and Gulf markets. EQM’s Ohio Valley Connector (OVC) is a key pipeline that came online in October and has since ramped up to more than 300 MMcf/d. OVC takes supply from EQM’s gathering and MPLX’s plants in Southwest PA and Northern WV to Rockies Express Pipeline in Monroe County, OH. OVC is expected to increase REX deliveries to 500 MMcf/d once the Powerup Project is in service, likely sometime in December. OVC is also feeding the TETCO Gulf Markets Expansion (phase I), that increased southbound throughput on TETCO from Ohio to Louisiana.
Gulf Markets is primarily contracted by producers Range and EQT, which will also boost volumes for the EQM and MPLX systems in SW PA. Improved pricing is an indication that more production can come online this winter, benefitting fee-based midstream operators in this area waiting for production to increase. (Tickers: EQM, SEP, MPLX)