U.S. Northeast natural gas producers in recent months got a substantial boost in pipeline capacity to receive and move incremental gas production volumes to attractive Gulf Coast markets. TC Energy’s Columbia Gas and Columbia Gulf transmission systems in March completed the Mountaineer Xpress and Gulf Xpress pipeline expansions, respectively, increasing the combined system’s Marcellus/Utica receipt capacity by 2.7 Bcf/d in the producing region, while also bumping up the Marcellus/Utica’s takeaway capacity to the Gulf Coast by nearly 900 MMcf/d. The duo of expansions is among the biggest takeaway capacity additions to be completed out of the Northeast, volume-wise, and among the handful that inextricably connect Marcellus/Utica supply markets to well-sought-after LNG exports markets along the Texas and Louisiana coasts. One of the export terminals these projects are designed to serve is Sempra’s Cameron LNG, where Train 1 began commercial operations in recent weeks. Today, we provide an update on the upstream and downstream implications of the recently installed Northeast-to-Gulf Coast pipeline capacity.
Gas pipeline takeaway expansions out of Ohio in recent years have ushered in a new era of interconnectedness between the Northeast and Gulf Coast markets, with implications for prices and flows on both ends of the transportation routes that connect them (see Here I Am, Baby and Look How Far We’ve Come). One of the pipeline systems instrumental to that transformation is TC Energy’s Columbia Pipeline Group, including Columbia Gas Transmission (TCO; gray-green web-like network in Figure 1) and Columbia Gulf Transmission (CGT), which includes the Mainline (orange line) and Onshore system (pink network). TCO/CGT began retooling their transportation capacity in the early years of this decade to allow for southbound flows out of the Northeast. That effort in the last two years has more directly focused on connecting producers/shippers to growing demand along the Gulf Coast from LNG exports. As we detailed in Waiting On the World to Change, TCO and its long-haul sister CGT in late 2017/early 2018 completed a pair of projects: the Leach Xpress (LXP; maroon section of TCO) and Rayne Xpress (RXP; indicated by the purple arrows along the CGT Mainline). LXP allowed TCO to deliver an incremental 1.5 Bcf/d of Marcellus/Utica gas supply to an interconnect with CGT at Leach, KY (maroon dot) by January 2018. For its part, RXP, which was completed just prior to that in November 2017, enabled as much as 1 Bcf/d of that supply to flow further south between Leach and Rayne, LA (orange dot), from where CGT could then shuttle the gas southeast to serve growing power generation demand or into Louisiana for delivery — either directly or indirectly via feeder pipelines — to then-under construction LNG export terminals.
This new capacity was primarily subscribed by Marcellus/Utica producers, with more than 1 Bcf/d of firm transportation contracts in place to move gas south to multiple locations, including CGT’s mainline pool (blue oval), the Rayne compressor station, or CS (again, the orange dot), Perryville Hub near Delhi, LA (red oval) and Henry Hub (purple oval). From these locations, liquefaction capacity holders have contracted to pull supply to the export terminals, including Cheniere Energy’s Sabine Pass LNG (via the Kinder Morgan’s Louisiana Pipeline) and Cameron LNG. [Note that both terminals also receive gas from other pipes. See the LNG Voyager Quarterly for a full list of firm capacity contracts associated with already-operating or soon-to-be-operational liquefaction capacity.]