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.

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