Natural gas futures contracts can be highly liquid and trade at high volumes, with prices constantly moving as new information arrives. But some contracts are far less liquid, so when a swing occurs it tends to last — and attract attention. That’s been the case this year for some prices on Texas Eastern Pipeline (TETCO) in Louisiana. Starting in the spring, TETCO’s East and West Louisiana zones have seen unusually elevated prices for the 2026-29 time frame, a result of the East zone’s transition into a demand hub. In today’s RBN blog, we discuss what is driving prices to historic premiums — and why they aren’t likely to become the new normal.
Major natural gas pipelines like TETCO typically have several receipt/delivery zones — that is, areas in which all receipts and deliveries are charged the same price for transport. TETCO East Louisiana (ELA; green-outlined area in Figure 1 below) comprises all of the TETCO system in Southern Louisiana that is east of Opelousas and, despite its name, also includes the TETCO system in Southern Mississippi. TETCO ELA has historically been a predominantly pass-through market, initially pulling gas from offshore systems south of New Orleans before sending it east or west, with just a portion staying to serve demand in the zone itself. TETCO ELA prices have always reflected this pattern, with discounted prices relative to Henry Hub and the other surrounding regions.
Figure 1. TETCO’s East and West Louisiana Zones. Source: RBN
Prices in West Louisiana (WLA; yellow-outlined area) have tended to be a bit higher, reflecting flows coming from ELA. With the decline in offshore gas production since the Shale Era, a higher proportion of the gas flowing through Eastern Louisiana has come in from Appalachia to feed demand to the southwest. Yet, it’s worth pointing out that the zone’s proximity to Henry Hub (white star) and Southern Louisiana’s spider web of gas pipelines has meant that WLA’s basis versus the Hub and other regions in Southern Louisiana has been relatively rangebound. But things are changing.
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