Columbia Gas MXP service restoration lifts Appalachian prices, flows, production

Denver — Cash prices at Appalachia's benchmark Dominion South hub surged in July 13 trading after a force majeure restricting capacity on Columbia Gas' Mountaineer XPress pipeline was lifted July 11.

With previously stranded supply now exiting the region, hub prices at Dominion South traded up about 8 cents at $1.32/MMBtu, preliminary settlement data from S&P Global Platts showed. Basis prices at the hub climbed 11 cents – up sharply from a July 10 settlement at 50 cents below Henry Hub.

At the nearby Columbia Gas Appalachia hub, cash prices were down roughly 8 cents to $1.59/MMBtu. Following the July 7 force majeure declaration by Columbia Gas, the operator's Appalachia hub gained 10 to 15 cents as upstream supply was rerouted away from the location and onto alternate pipelines.

In the neighboring Southeast and Gulf Coast markets, prices were little changed on July 13, as additional supply from Appalachian producers was offset by stronger power burn demand, particularly in Texas.

At the Henry Hub, cash prices were down about 3 cents to $1.71/MMBtu. At Houston Ship Channel, the spot price was off by just a penny, trading around $1.76/MMBtu. At many hubs across the Southeast and Gulf Coast, prices surged on July 7 amid a sharp contraction in Northeast supply.

In Midcontinent gas markets, prices were also little changed on July 13, after rising sharply in the wake of the July 7 outage, also amid concern over the availability of Appalachian gas supply.

Service restoration

On July 11, Columbia Gas lifted its force majeure on the Mountaineer XPress pipeline, restoring capacity to pre-outage levels around 2 Bcf/d, up from a reduced operating level at 100 MMcf/d. On July 13, flows on the segment were estimated at 640 MMcf/d. During the four-day outage, flows had declined to just 150 MMcf/d, S&P Global Platts Analytics data shows.

Gas transmissions from the Northeast to the Southeast are higher over the last several days. On July 13, net flows were estimated at 4.8 Bcf/d after falling to an average 4.3 Bcf/d from July 7 to July 10.

The service restoration on MXP has also lifted Appalachian gas production recently. On July 13, combined output from the Marcellus and Utica shales was estimated at 32.2 Bcf/d. After averaging just 31.6 Bcf/d during the four-day outage, Appalachian production hit 32 Bcf/d on July 11 and has continued to climb over the past several days amid rising utilization the MXP line.

While output from the West Virginia wet and South Pennsylvania dry windows was initially hard hit, output levels were later largely restored as an estimated 800 MMcf/d in upstream production receipts were rerouted to Texas Eastern Transmission.

The July 7 unplanned outage on Columbia Gas' MXP segment near Leach, Kentucky was not initially expected to be restored until July 13. No details about the cause of the outage have yet been disclosed.