Cabot set to ramp up output ahead of takeaway

Cabot Oil & Gas will have plenty of takeaway options for its natural gas production in the Marcellus in the coming months as new pipeline infrastructure and two nearby power plants come on line this summer and its LNG export agreement takes effect.

The independent producer had output of 1.88 Bcf/d (53mn m³/d) during the first quarter, up by less than 1pc on the year because of the company's sale of assets in the Eagle Ford, which completed during the quarter. Cabot plans to reinvest in growth in the Marcellus and anticipates bringing 20 wells on line there during the second quarter.

Cabot expects some downtime this quarter as gathering systems are completed to connect the producer's wells to Transco's Atlantic Sunrise pipeline project. But the producer will ramp up output significantly in the second half of the year, bringing an additional 60 wells on line. The 1.7 Bcf/d expansion on Transco is scheduled to begin flows in July, and will ship gas from Pennsylvania to markets in the mid-Atlantic and southeastern US.

Dominion Energy's Cove Point LNG export facility began operations earlier this month, and Cabot's 20-year supply agreement with Pacific Summit Energy is now in effect, chief executive Dan Dinges said on an earnings call today. But Cabot will not be able to supply the export facility directly until Atlantic Sunrise begins flowing. The producer is fulfilling its obligation in the meantime through various transportation paths, combined with third-party purchases.

Two gas-fired power plants that Cabot will be the sole supplier of are also scheduled to begin service this summer. The Moxie Freedom power facility began taking test gas in early February while making final preparations for full operation. The plant is expected to begin service on 1 June, with 165mn cf/d of supply from Cabot.

The Lackawanna Energy Center also recently began burning test gas, and is expected to begin partial service on 1 June. The full plant should begin operations by 1 December, at which point it will have a nameplate capacity of 240mn cf/d, with Cabot being the sole supplier.