A June 7 TransCanada Corp. pipeline explosion leading to a force majeure is limiting gas movement and cutting into prices in the Northeast.
After an early morning rupture on relatively new 36-inch Leach XPress transmission line in western West Virginia, TransCanada took the pipe's roughly 1.5 Bcf/d of capacity offline. Leach XPress is part of the Columbia Gas Transmission LLC system that carries gas from southeast Ohio, West Virginia and southwest Pennsylvania west across Ohio and then south to an interconnect in Leach, Ky.
Flows on the Columbia Gulf Transmission LLC pipeline, which connects to the Leach XPress line and moves gas through Kentucky, Tennessee, Mississippi and Louisiana, were down about 500 MMcf/d, according to a note from energy investment bank Tudor Pickering Holt & Co.
Northeast gas hubs were seeing prices drop as gas struggled to get to market without the Leach XPress capacity. June 8 day-ahead spot prices were down about 11% at the Dominion South hub in the western Marcellus, while prices in the central and northeast Marcellus at hubs like Leidy and Dominion North were also down significantly for the day. June 8 day-ahead prices at the TETCO M2 and TETCO M3 points also fell more than 9%, according to S&P Global Market Intelligence data.
Producers are working to reroute their gas while Leach XPress is offline. For instance, while Range Resources Corp. has a 300 MMcf/d subscription, the company is shifting its gas to other lines. "Range does not anticipate impacts to production volumes as the company's natural gas is being rerouted to other markets. The impact to second quarter cash flow is currently expected to be minimal," the shale producers said in a news release.
Tudor Pickering Holt said it did not expect the force majeure to significantly affect Columbia Gas, either. "Generally, force majeure events result in minimal cash flow impact to pipeline operators as make-whole provisions for customers' volumes may be utilized once the pipe is up and running," the note said.
The Leach XPress rupture and fire did not cause any injuries but affected about 10 acres of forest, according to the Marshall County, W.Va., Office of Emergency Management.
Columbia Gas began service on the newly built 1.5 Bcf/d Leach XPress line on Jan. 1. Kaiser Francis Oil Co. and Ascent Resources each subscribed to 400 MMcf/d of the pipe's capacity, and Range Resources, Noble Energy Inc. and Gulfport Energy Corp. subscribed to most of the rest.
