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Majority gas line capacity releases in US northeast

20 Nov 2017, 8.33 pm GMT

Majority gas line capacity releases in US northeast

Houston, 20 November (Argus) — Natural gas pipelines in the US northeast in recent years have released significantly more capacity contract rights than pipelines elsewhere in the country amid prolific supplies from the Appalachian shale region.

The top five pipelines in terms of released capacity since 2012 are all lines that operate in the mid-Atlantic, according to an Argus analysis of data from Capacity Center. Those pipelines, in order of largest average capacity released, are: Transcontinental Gas pipeline (Transco), Columbia Gas Transmission, Texas Eastern Transmission, Tennessee Gas pipeline, and Dominion Transmission.

Transco accounts for the largest share of released capacity, averaging at 691mn cf/d (20mn m³/d) in a total 262 number of records from Capacity Center. The line's number of release records are nearly twice the number of records from Southern Natural Gas, a southeastern US pipeline which lands at sixth on the list.

The bulk of released capacity occurred on these pipelines following the rush of natural gas production out of Appalachia from hydraulic fracturing, vice president of operations for Capacity Center Steven Hinton said.

Gross gas output from the Appalachian region, which includes the Marcellus and Utica shales, rose in October to more than 25 Bcf/d, according to the US Energy Information Administration (EIA). Appalachian production in October was up by 1.7pc from a September and up by 17pc from a year earlier.

The soaring production in the region has transformed long-haul pipelines to allow for bi-directional and more segmented operations, Hinton said.

Before fracturing shifted these market dynamics, gas supplies traditionally flowed northward on pipelines from the Gulf coast production region to serve mid-Atlantic and New England demand.

The releases reported by Capacity Center can be for either short- or long-term releases of contract rights on pipelines, but the bulk of the releases in the northeast are attributable to Appalachian shale supplies disrupting traditional flows as many utilities in the northeast region "can now get gas from Pennsylvania instead of Texas," Hinton said.

The data from 2012 to present shows that capacity releases on Transco peak annually in late March, reaching their highest level for the six-year period on 23 March 2014 at 847mn cf/d.

Market participants often buy capacity in connection with their commodity trading in the month-ahead market, meaning that capacity release activity can sometimes take a seasonal or cyclical trend. Transco releases also spike in late October each year, remaining lower than the March peaks. The highest October release spike for the data period occurred on 22 October 2017 at 601mn cf/d.

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