June 5, 2012 / 3:16 PM / 5 years ago

TEXT-S&P on shale natural gas' effect on U.S. pipelines

 (The following statement was released by the rating agency)	
 June 5 - The burgeoning development of shale gas plays across the U.S. has
changed the playing field for long-haul pipelines, according to a report
published today by Standard & Poor's Ratings Services titled "The Shale Gas Boom
Is Shaping U.S. Gas Pipelines' New Reality." 	
The booming Marcellus Shale region in New York and Pennsylvania, for instance, 	
has diminished the need to move natural gas along traditional routes, such as 	
to the East from the Rocky Mountain region. As a result, large stretches of 	
pipelines are now underutilized. Why get your gas all the way from the West 	
when new sources are opening up right next door?	
Key trends for the pipeline industry today include:	
  -- The industry is entering a new world of super-low natural gas prices 	
and a shale gas glut.	
  -- New shale gas production in the east has diminished the need to move 	
natural gas along traditional west-to-east routes, leaving large stretches of 	
pipelines underutilized.	
  -- Companies are trying various methods to adapt from a model in which 	
long-haul pipelines capitalized on price spreads between producing areas and 	
consuming regions, to one to one in which pipelines' greatest value is in 	
clearing bottlenecks and providing end-users a reliable gas supply, even when 	
demand is high.	
  -- Despite the industry's hiccups, we think its creditworthiness should 	
remain largely stable. 	
"We continue to view the pipeline sector's creditworthiness as broadly stable 	
and expect only a modest number of downgrades over the next two years. 	
However, the shifts in the industry may hit some companies harder than 	
others," said Standard & Poor's credit analyst Nora Pickens. 	
The industry is trying to regain some of the balance it has lost since the 	
shale gas revolution began--and in this new era, adapting to new realities 	
will be critical for all.	
The report is available to subscribers of RatingsDirect on the Global Credit 	
Portal at www.globalcreditportal.com. If you are not a RatingsDirect 	
subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 	
or sending an e-mail to research_request@standardandpoors.com. Ratings 	
information can also be found on Standard & Poor's public Web site by using 	
the Ratings search box located in the left column at www.standardandpoors.com. 	
Members of the media may request a copy of this report by contacting the media 	
representative provided.	
 (New York Ratings Team)	

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