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Major gas pipelines face over 2.6 million Dth/d of expiring contracts in Q1

Major U.S. natural gas pipelines have more than $11 million in the balance with over 2.6 million Dth/d of firm transportation contracts scheduled to roll off during the first quarter, according to an analysis of S&P Global Market Intelligence data.

While Kinder Morgan Inc.'s Wyoming Interstate Co. LLC could take the biggest hit in terms of dollars, with a contract worth $4.5 million in monthly revenues expiring at the end of March, that agreement only accounts for 8.4% of volumes on the 850-mile pipeline that runs from western Wyoming to northeast Colorado. Representatives of Kinder Morgan declined to comment on whether the capacity set to expire had been recontracted.

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Enable Gas Transmission LLC, meanwhile, could have seen over 1 million Dth/d of its contracted capacity expire when agreements with shippers roll-off on March 31, but representatives of parent company Enable Midstream Partners said in an email that it "contracted or extended over 950,000 Dth/d of firm transportation capacity." Those new contracts, including one with Enable Midstream parent and largest customer CenterPoint Energy Inc., will begin April 1. Enable Gas Transmission serves customers primarily in Arkansas, Louisiana, Oklahoma and Texas.

Algonquin Gas Transmission LLC has also reupped 110,000 Dth/d of firm capacity scheduled to expire at the end of March, according to Enbridge Inc. spokesperson Michael Barnes, who said in an email that "the contract has been updated and is current."

Dominion Energy Services. Inc. communications specialist Matt Thurber said Dominion Energy Questar Pipeline LLC renewed a contract accounting for 5.7% of the pipeline's committed capacity that would have rolled off Jan. 31 as well.

Representatives of MDU Resources Group Inc., on the other hand, said demand for WBI Energy Transmission Inc.'s capacity "remains high" as a firm transportation agreement accounting for 8.2% of contracted volumes rolls off March 31. WBI Energy Transmission moves gas between Minnesota, Wyoming, Montana, South Dakota and North Dakota.

Rockies Express Pipeline LLC, a joint venture between Tallgrass Energy LP and Phillips 66, could lose $1.8 million in monthly revenues when a shipper contract expires at the end of March. Fitch Ratings recently downgraded the pipeline's long-term issuer default credit rating from BBB- to BB+, sending it into junk territory in part because of recontracting concerns.

Market Intelligence's analysis, which used an index of customers and tariff data, covered U.S. 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. Market Intelligence estimates of monthly reservation revenue used the maximum revenue because negotiated rates are often not disclosed.

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