American Oil and Gas Reporter - August 2022 - 55

SpecialReport: Marcellus & Utica Activity
As meteoric as Appalachian supply
growth has been over the past decade,
Toby Rice, chief executive officer at Pittsburgh-based
EQT Corporation, the largest
domestic gas producer, insists the sky is
the limit if political leaders, regulators,
consumers and allies recognize Appalachia's
potential and support the infrastructure
build-out necessary to capture
the massive recoverable reserves locked
away in the Marcellus, Utica and Point
Pleasant formations.
In fact, Rice says, Northeast production
could double again to the 70 Bcf/d range
in short order under the right set of
market, regulatory and operating conditions.
" We have a solution and that is
specifically unleashing U.S. natural gas
on the world stage, where we have said
that we have the ability to increase LNG
export capacity here in the United States
an incremental 50 Bcf/d, " he says, noting
that Appalachia would provide 35 Bcf/d
of that total and other U.S. basins would
account for the remaining 15 Bcf/d.
Unleashing U.S. LNG
Achieving 35 Bcf/d of new Appalachian
production will require only 50 more
active rigs and frac crews, Rice states.
" Doubling Appalachian gas production
to unleash U.S. LNG is entirely doable
sooner rather than later, " he holds.
But fully unchaining the " Northeast
supply beast " requires significant infrastructure
additions on par with the level
experienced between 2014 and 2020,
when total pipeline takeaway capacity
from the Northeast increased by 16.5
Bcf/d (including gas flows southward to
the Gulf Coast, supporting record U.S.
LNG exports). The capacity growth has
come to a sudden halt over the past two
years with cancellations of major projects,
placing a ceiling on output growth.
To make it happen, major and accelerated
investments in export terminals
and pipelines are necessary in takeaway
capacity-strapped Appalachia. A massive
capacity expansion would be paid for
entirely by the natural gas industry, costing
taxpayers nothing, Rice points out.
The move under a more favorable political
and regulatory environment would
provide 50% surplus energy that would
offer unprecedented energy security to
American citizens even as geopolitical
risks emerge in all corners of the world,
Rice says.
Gas could be delivered to Europe for
$10/MMBtu compared with more than
$40/MMBtu today, he goes on. At the
same time, American consumers would
benefit by having clean, abundant, secure
and affordable domestic natural gas frame
the foundation of the U.S. economy. Increased
supplies would keep U.S. storage
full and domestic prices in the $4/MMBtu
range while creating high-paying jobs
and compelling benefits for all sectors of
the economy.
The fortunes of U.S. manufacturers
would get a boost from fuel prices 2.5
times lower than costs for competing
international players, Rice says. Environmental
benefits may include lowering
global emissions by 1.5 billion tons annually
as U.S.-produced natural gas displaces
coal in power generation markets
from western Europe to Southeast Asia.
" For our allies around the globe, an
additional 50 Bcf/d of U.S. LNG exports
on the world stage would be the equivalent
of wiping Russian supply off the map
two and a half times over, " he asserts.
" Adding that amount of energy would
bring tremendous stability and security
to our allies and insulate us from the
price shocks we see when geopolitical
events happen around the world. "
A change starts with sentiment, and
the environmentally friendly argument
in favor of U.S. gas is resonating with
some former industry opponents who are
beginning to understand that blocking
pipeline expansion means blocking energy
security, lower prices and greater emissions
reductions, Rice states.
He points out that regulatory proposals
to establish a national methane emissions
threshold of 0.2% compare with actual
methane emissions of 0.05% in Appalachia
as EQT and others eliminate pneumatic
devices and take other measures to curb
fugitive emissions sources.
" More than 80% of the energy used
worldwide is hydrocarbon based, and as
long as that is the case, we should be
using the cleanest hydrocarbons. Nothing
is as cleanly produced as gas from Appalachia
shale, " Rice says.
Currently, the industry is going back
to the table to identify changes in policies
and regulations that will push projects
forward, he reports. Reductions in red
tape can speed approval and implementation
from years to a matter of months.
According to Rice, EQT has the capability
to significantly boost production
from an inventory of 1.6 million acres,
which includes 940,000 core acres with
an inventory life of 18-plus years and
another 700,000 acres that is economically
attractive at gas prices north of $3/MMBtu.
" EQT has an investment-grade balance
sheet that is going to help in structuring
the long-term contracts, and we also have
the best environmental score for our
natural gas, which means it is going to
be the most coveted natural gas on the
world market, " he says.
EQT Corporation is America's largest producer of natural gas, with all of its operations
in the Appalachian Basin. EQT is proposing an " unleash U.S. LNG " strategy to increase
domestic LNG export capacity by an incremental 50 Bcf/d, fed primarily by Appalachian
production doubling to provide 35 Bcf/d of that total and other U.S. basins accounting
for the remaining 15 Bcf/d.
AUGUST 2022 55
American Oil and Gas Reporter - August 2022

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