June 11, 2018 – Natural Gas Intelligence
Natural Gas Pipeline Constraints Destroyed Up to 4 Bcf/d in January Bomb Cyclone, Says RBN
By: Jeremiah Shelor
In January, when constraints sent natural gas prices skyrocketing during the “bomb cyclone” in the Northeast, the lack of pipeline capacity destroyed as much as 4 Bcf/d of demand as more coal and fuel oil entered the market, according to RBN Energy’s David Braziel, who directs finance and fundamental analysis.
Braziel, during a presentation in Boston at this week’s LDC Gas Forum, focused on Transcontinental Gas Pipe Line (Transco), where spot prices along its Zone 5 and Zone 6 peaked above $100/MMBtu this past winter. He said it was the “poster child” of the shifting supply/demand dynamics in the Northeast.
This shift has seen production out of the Marcellus and Utica shales reverse flows on Transco, driving lower prices for most of the year and leading to more gas-fired power generation. “The tremendous growth in Marcellus production has flipped Transco on its head,” Braziel said.
Prices at Transco Zone 6 had consistently traded at a premium to Zone 5, which in turn traded at a premium to Zone 4, reflecting the cost of transportation as gas moved south to north on the pipeline, he said.
“Now on almost all summer days aggregate Northeast supply exceeds demand and gas is looking for routes out, so Transco Zone 6 prices trade at a discount to Zone 5,” Braziel said. “With abundant cheap natural gas available for most of the year, a lot more gas is being used for baseload power generation” in place of coal…
Read the full article here: http://www.naturalgasintel.com/articles/114675-natural-gas-pipeline-constraints-destroyed-up-to-4-bcfd-in-january-bomb-cyclone-says-rbn
