The coming intra-Appalachia price disconnect

New Ohio demand sources gas downstream of existing constraints, creating intra-basin opportunity

I previously wrote about the specific connectivity deficiencies that constrain takeaway utilization in western Appalachia across four pipelines, leaving ~900 MMcfd of spare capacity in aggregate. But across all four pipelines, the overarching issue is that the Utica in Ohio, and to a lesser extent the rich-gas Marcellus, are short inventory relative to the dry-gas Marcellus further east.

Against that backdrop, this earnings season confirms that flows out on these four routes are likely to decline further. Both new power plants under construction in Ohio and potential Ohio pipeline projects source gas downstream of the existing constraints. That means the new projects don’t increase market access for the core dry-gas Marcellus E&Ps best-positioned for growth. But the projects do create an opportunity for these producers, and their midstream counterparties, to develop smaller, intra-basin projects to bring core dry-gas volumes across the Ohio River to access what are likely to be much stronger prices.

Williams integrated power projects

In its earnings presentation, Williams expanded and extended its plans to develop and source gas for power plants in Ohio. The company is now building three power facilities, with a combined capacity of more than 1 GW. One of these projects is due online in each of 2026-28: Socrates (North & South), Apollo, and Socrates the Younger.

These power plants are far from Williams’ own Ohio gathering and processing assets near the Ohio River, so they’ll use gas from other systems. The Socrates plants coming online later this year will source gas from a combination of Columbia Gas (TCO) and Eastern Gas, and the Apollo plant will take gas from Nexus. In all three cases, though, the power plants source gas downstream of typical Northeast takeaway constraints on these systems.

Figure 1 | Williams proposed power projects and feedgas pipelines

Columbus Area Project

TC Energy announced that the non-binding open season for its planned 500 MMcfd Columbus Area Project on Columbia Gas (TCO) was oversubscribed by a factor of three. The project proposes moving gas to Ohio customers near Columbus — possibly including Williams for its power plants — from receipt points at Clarington, Majorsville, Waynesburg, TCO Pool, and Leach. The latter two would not source production directly. Instead, they’d pull volumes north that would otherwise flow south on Columbia Gulf. The former two are directly connected to supply but are unlikely to see strong production growth: