Friday's natural gas spot market closing prices were an extreme example of the now established price separation of the Marcellus Northeast spot market from Louisiana's Henry Hub. While Marcellus Northeast Gas is typically 20 to 40 cents below Henry Hub, Friday's closing prices featured a Grand Canyon gap between the two.
As quoted in the Wall Street Journal on Saturday, Marcellus Northeast closed at $1.94/mcf and Henry Hub at $3.74 for an astonishing $1.80/mcf price difference. The low prices in the Marcellus Northeast are rooted in enormous production from some of America's most prolific gas wells.
The build out of gas production infrastructure in Northeast, Pennsylvania is significant and local citizens are rightly pushing for strong regulation and installation of the best technology. For example, the use of the best pollution controls on compressor engines can cut those emissions by 90% and the utilization of the best technology to identify methane leaks can sharply reduce them, reducing risks of explosions and the volume of heat trapping gas entering the atmosphere.
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