Range Resources benefits from Spectra expansion

Independent natural gas producer Range Resources has benefited from Spectra Energy's Gulf Markets pipeline expansion, executives said during an earnings call this week.

Amid prolific production from the Marcellus and Utica shales, spot natural gas prices near the wellhead have fallen well below the Henry Hub, prompting pipelines to plan projects that improve takeaway options. Independent producers in Appalachia increasingly see pipeline expansions as a boon to their balance sheets as they enable gas produced there to reach more lucrative markets. The Marcellus is the largest producing natural gas field by volume in the US, while the Utica is the fastest growing field.

The Texas Eastern Transmission (Tetco) Gulf Markets expansion has added 628mn cf/d (18mn m³/d) of takeaway capacity for gas moving south from its market zone 2 into the southeast. The expansion, which came on line on 4 October, is allowing Range Resources to move an additional 150mn cf/d of its Marcellus production to the Gulf coast, chief executive Jeffrey Ventura said.

"Like the Uniontown to Gas City pipeline, which became operational this time last year, this project immediately improves our expected Marcellus netbacks," he said. The Uniontown to Gas City project connected Pennsylvania to Indiana on Tetco, adding 425mn cf/d of capacity.

The next projects the producer is looking forward to include Columbia Gas Transmission's 1.5 Bcf/d Leach Xpress project and Energy Transfer's 3.25 Bcf/d Rover project. Both have received final environmental impact statements from the US Federal Energy Regulatory Commission and should be in operation in the fourth quarter of 2017.

Range Resources expects it price differential will narrow to a discount of 46¢/mmBtu to Nymex in the fourth quarter and to about a 33¢/mmBtu discount in 2017.

The company produced 1.5 Bcf of natural gas equivalent per day (Bcfe/d) in the third quarter, down by 4pc from a year earlier. The company expects to produce 1.9 Bcfe/d in the fourth quarter.