TETCO's 30-inch diameter gas system closer to full operational service

Enbridge's Texas Eastern Transmission said it was making progress resolving safety concerns and returning its 30-inch diameter gas system to full operational capacity, which could allow for around 750 MMcf/d of additional Northeast-to-Southeast flows along the pipeline.

"At this time, TE believes that no additional in-line inspection tool runs, or excavations will be required by PHMSA [Pipeline and Hazardous Materials Safety Administration] prior to returning lines 10 & 15 to full pressure temporarily in accordance with the ACAO," Texas Eastern said in an update on June 30.

"Furthermore, in addition to the ongoing engineering analysis, TE is in the process of completing a formal engineering assessment to PHMSA by mid-July for their review, at which point TE expects to be able to provide more definitive guidance on a potential return to service timeframe shortly thereafter," according to the update.

PHMSA issued an Amended Corrective Action Order on June 1 that re-imposed a 20% pressure reduction on Texas Eastern's Lines 10 and 15 between Uniontown Compressor Station in Pennsylvania and Kosciusko Compressor Station in Mississippi. S&P Global Platts Analytics data shows that Texas Eastern's Northeast-to-Southeast flows dropped by around 40% following the reintroduction of pressure restrictions. The impact of the order was immediate: flows past Danville, a useful indicator of southbound flows, plunged to 1.04 Bcf on June 2 from 1.72 Bcf on June 1.

Flows past Danville have remained low since then, averaging 1.16 Bcf/d in June from 1.91 Bcf/d in May.

PHMSA's original pressure restriction orders were put in place following a May 4, 2020, pipeline explosion on Texas Eastern's 30-inch system in Kentucky. By December 2020, Texas Eastern had completed the items outlined in a remedial work plan, which led to PHMSA conditionally approving a return to full operational capacity.

While some southbound Northeast gas flows have been diverted to Tennessee Gas Pipeline, total flows trail May levels. The limited outflow capacity deepened the discount of some Appalachian spot gas locations to cash Henry Hub. Cash Dominion South's discount plunged 42 cents to $1.045 on June 1 and remained wide. Dominion South's June 2-30 basis of 95 cents was more than 30 cents lower than May.

The removal of the pressure reduction order would likely have a bullish impact on Appalachian spot gas prices, allowing more gas to flow toward robust export and gas-fired power demand in the Southeast.