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Transco spot prices sink in spite of higher LDC demand

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Essential Energy Insights - September 17, 2020

Essential Energy Insights September 2020

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Transco spot prices sink in spite of higher LDC demand

Evenas overall demand climbed year over year during the week ended May 4, spot naturalgas prices along TranscontinentalGas Pipe Line Co. LLC sank as off-system deliveries helped to offsetincreased gas utility demand.

Duringthe week, nominations at delivery points along the pipeline averaged 7.58 Bcf/d,up 2.4% versus the year-ago week, while nominations for deliveries on to the pipelinefell 1.2% to 7.97 Bcf/d.

Off-systemdeliveries fell 11.8% to 2.24 Bcf/d, while power-sector consumption and residentialand commercial deliveries jumped 12.8% and 30.9%, respectively, to 2.1 Bcf/d and2.78 Bcf/d, as net injections into storage declined 55.9% to 314,438 Dth/d.

On thesupply side, a 137,623 Dth/d increase in receipts from interconnected interstateand intrastate pipelines failed to offset a 7.3% decline in net receipts from theupstream and midstream sectors, which fell to 3.01 Bcf/d.

Duringthe week, deliveries in zones 4, 5 and 6 accounted for 80.7% of system demand, whilereceipts in zones 3, 4 and 6 accounted for 85.1% of supply coming on to the system.Alone, Zone 6 accounted for 51.4% and 42.2% of the week's average supply and demand,respectively.

Zone3 saw the week's average supply decline 32.5% to 652,944 Dth/d, as receipts frominterconnected pipelines declined 31.5% to 454,313 Dth/d, led by a 94,454 Dth/ddecline in flows from Garden BanksGas Pipeline LLC.

Duringthe week, Zone 3 spot natural gas prices averaged $1.862/MMBtu, down 27.5% fromthe year-ago level of $2.570/MMBtu.

At Zone4, flows from interconnections with other pipelines were nearly flat year over yearat 2.01 Bcf/d, as flows from TennesseeGas Pipeline Co. declined entirely to help offset increased flows elsewhere.

Zone4 off-system deliveries more than doubled to 187,323 Dth/d, driven primarily bya 171,413 Dth/d increase in flows to ElbaExpress Co. LLC.

Spotprices in the zone were down 27.5% year over year to an average of $1.869/MMBtu,a 0.7-cent premium to Zone 3.

Similarly,spot prices in Zone 5 averaged $1.931/MMBtu, a 26.7% decline from the year-ago week,but a 6.2-cent premium to Zone 4.

Off-systemdeliveries in the zone climbed 119% year over year to 344,952 Dth/d, driven largelyby a 116,828 Dth/d increase in deliveries to the Elba Express pipeline.

Residentialand commercial demand in Zone 5 climbed 6.7% to 671,700 Dth/d, with the largestyear-on-year variations in flows seen at gas utilities in Virginia and North Carolina.

TranscoZone 6 saw the lowest spot natural gas prices along the pipeline as prices declinedversus the year-ago week. At $1.545/MMBtu and $1.596/MMBtu, respectively, for Zone6 non-NY and Zone 6 NY, average spot prices were down 39.3% and 37.9%, respectively,below the year-ago week.

The dropin the zone's spot prices comes in spite of an 8.2% increase in demand to 3.2 Bcf/d.Receipts from the midstream sector climbed 11.8% to 2.24 Bcf/d, while deliveriesfrom interconnected pipelines edged 0.9% lower to 1.59 Bcf/d.

and Williams Field Services Co. LLCled the increase midstream deliveries to Transco.

Meanwhile,a 100,500 Dth/d increase in supply from TennesseeGas Pipeline Co. and a 35,651 Dth/d increase in flows from wasoffset by a reduction in flows elsewhere.

The zone'soff-system deliveries declined 40.2% to 726,096 Dth/d, the bulk of which was a 330,446Dth/d drop in flows to interconnections with Dominion Transmission Inc.

Zone6 deliveries to local distribution companies, or LDCs, jumped 44.2% to 1.77 Bcf/d,driven primarily by a 531,613 Dth/d increase in flows to a group of points servingConsolidated Edison Co. of New YorkInc. and National GridUSA.

Nearlyall deliveries to power generators took place in zones 4, 5 and 6, with zones 4and 5 together accounting for 78.3% of the week's average flows to the power sector,and Zone 6 accounting for the bulk of the remainder. Total system deliveries tothe power sector climbed 12.8% to 2.1 Bcf/d, as deliveries in Zone 4 climbed 30.2%and deliveries to Zone 5 slipped 6.4%. Zone 6 deliveries to the power sector climbed33.4% to 436,829 Dth/d.

Marketprices and included industry data are current as of the time of publication andare subject to change. For more detailed market data, including power, natural gas and coal index prices, as well as forwards and futures, visit our energy commodities pages. To view operational statistics on interstatenatural gas pipelines, go to our Pipeline Summary Page. To view natural gas operational flow data forreceipt or delivery points, go to our Operational Capacity by Point Page.