Waiting on the World to Change, Part 3 - TransCanada's Columbia System Set to Boost Gulf-Bound Gas Flows

U.S. Northeast natural gas producers will soon get another boost of pipeline capacity with direct access to Gulf Coast demand. TransCanada’s Columbia Gas and Columbia Gulf transmission systems are gearing up to place into service their tandem Mountaineer Xpress and Gulf Xpress expansions, which will allow another 1 Bcf/d of Marcellus/Utica gas to flow south as far as Louisiana. The new capacity should further ease takeaway constraints for moving gas out of the Northeast, potentially redistributing outflows across the various takeaway routes, while also allowing Appalachian gas supply to grow. The duo of expansions is also the last of the southbound expansions from the Northeast, at least until late 2019, when the embattled Atlantic Coast and Mountain Valley projects are due online. Today, we detail the upcoming expansions.

In this series, we have been providing the updates on the latest round of Northeast takeaway projects that have either come online over the past couple of months or are due to come online in short order. The incremental takeaway capacity from these projects will affect the regional as well as the U.S. gas supply-demand balance this winter and beyond. As we detailed in our recent Drill-Down Report, the capacity that’s been phased in this year — first from ETP’s Rover Pipeline this summer and more recently from Williams/Transco’s Atlantic Sunrise and Enbridge/DTE Energy’s NEXUS pipelines — has finally allowed Northeast takeaway constraints to ease and catapulted Marcellus/Utica basis (local outright prices minus the Henry Hub prices) to the strongest levels we’ve seen for this time of year since 2013.

To recap the recent expansions, last month Williams/Transco’s Atlantic Sunrise achieved full completion by launching service for its design capacity of 1.7 Bcf/d starting gas day October 6 (see Part 1 of Waiting on the World to Change for a look at early flows on Atlantic Sunrise). That same week, TransCanada/Columbia Gas Transmission was given the nod by FERC for partial service on both its Mountaineer Xpress and WB Xpress projects. Since then, FERC also gave the greenlight to NEXUS to begin service on the greenfield portions of the pipeline, and over the past weekend, the new line began to post its first flows (see Part 2 of Waiting on the World to Change). There is a lot more to come with NEXUS, as the project reaches full completion and capacity commitments kick in. Also last week (on November 1), FERC approved the final pieces of ETP Rover, namely the Sherwood and Columbia Gas Transmission (CGT) laterals. We’ll come back to the latest on Rover’s gas flows in a future blog, but today, we focus on the next major Northeast-to-Gulf Coast flow reversal projects to come online — TransCanada’s Mountaineer Xpress and Gulf Xpress expansions of the legacy Columbia Gas Transmission (TCO) and Columbia Gulf Transmission (CGT) systems.

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