Major gas pipelines face over 4.6 million Dt/d of expiring contracts in Q4

Houston — Major US natural gas pipelines have more than $10 million in the balance with over 4.6 million Dt/d of firm transportation contracts scheduled to roll off during the fourth quarter, according to an analysis of S&P Global Market Intelligence data.

While Loews Corp.'s Texas Gas Transmission LLC could take the biggest hit in terms of total dollars, with a contract expiring at the end of December worth $2.8 million in monthly revenues, that agreement only accounts for 6.5% of the 5,975-mile bidirectional pipeline's capacity. Texas Gas Transmission provides Gulf Coast customers with supplies from the Marcellus and Utica shales.

Representatives of Loews had not responded at the time of publication to requests for comment on whether the capacity set to expire had been recontracted.

ETC Tiger Pipeline, meanwhile, could see about 41.7% of its contracted capacity roll off when agreements with drillers Shell Energy North America (US) and Ovintiv Marketing Inc. end Nov. 30, with Shell's firm reservations alone potentially costing $2.1 million in monthly revenues.

The 200-mile Energy Transfer pipeline from Texas to Louisiana also faces a legal showdown with Chesapeake Energy in the US Bankruptcy Court for the Southern District of Texas over a firm transportation agreement accounting for 23% of its contracted capacity due to expire at the end of 2030.

The Federal Energy Regulatory Commission declared in an order that, while Chesapeake can move to reject a contract in bankruptcy court without agency approval, this rejection does not alter regulatory obligations under the Natural Gas Act.

Kinder Morgan's TransColorado Gas Transmission could lose 22.6% of its contracted capacity and Wyoming Interstate could lose 3.1% as transportation agreements worth $3 million in monthly reservations roll off.

Fayetteville Express Pipeline, a joint venture between Kinder Morgan and Energy Transfer, could also see 92% of firm reservations expire at the end of December. Both Kinder Morgan and Energy Transfer declined to comment on whether the capacity set to expire on their pipelines had been recontracted.

S&P Global Market Intelligence's analysis, which used an index of customers and tariff data, covered US interstate gas pipeline contracts with maximum daily transportation of over 100,000 Dth/d and their estimated reservation charges, if available.

Pipelines provide gas transportation service to shippers such as producers, utilities, industrial customers, power generators and energy marketers, often under firm contracts. Most of these agreements feature fixed reservation charges that are paid monthly regardless of the actual gas volumes moved or stored, plus a tariff component based on volume to compensate pipelines for their variable costs. S&P Global Market Intelligence estimates of monthly reservation revenue used the maximum revenue, because negotiated rates are often not disclosed.