Since we discussed NGL supply in the Permian basin last month, let’s deep dive into another key basin – the Appalachia. Covid-19 is hitting the oil and gas sector as rig counts are falling on reduced associated gas production from wet shale plays. Where does the Appalachia go?

Where we’ve been to where we are:

Appalachia has been one of the biggest shale regions, producing about 33 Bcf/d of natural gas, of which ~9 Bcf/d (or ~26%) is estimated to be wet gas. Over the last 7 years, the value of residue gas and NGL in aggregate exceeded local gas prices, incentivizing producers to develop wet acreage. As wet production increased, so did processing infrastructure. Midstream companies anticipated the wave of production and aggressively increased processing plant capacity. Processing capacity in the Appalachian currently stands at ~10 Bcf/d, while basin-level utilization stood at 80% as of 4Q 2019.