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Millions in revenue at stake for big US gas pipelines as contracts roll off

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Millions in revenue at stake for big US gas pipelines as contracts roll off

Major U.S. natural gas pipeline operators have hundreds of millions of dollars of revenue at stake from the expiration of up to 5.2 MMDth/d of firm transportation if they do not renew or recontract as deals expire in the third quarter, with July 31 a particularly meaningful date, according to an analysis of S&P Global Market Intelligence data.

Loews Corp.'s Gulf South Pipeline Co. LP network between the Gulf Coast and customers in the Northeast, Midwest and Southeast faces the biggest potential capacity hit as contracts with shippers for 1.4 MMDth/d end July 31. Loews did not respond to requests for comment about the renewal status of the expiring capacity.

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According to data as of July 1, Enable Midstream Partners LP's 1,663-mile Enable Mississippi River Transmission LLC pipeline from Louisiana to Illinois, which primarily serves St. Louis-area markets, has 51% of its total capacity, or 810,329 Dth/d, scheduled to expire at the end of July when a contract with Spire Missouri Inc. rolls off. However, on July 13, the pipeline reported two new contracts with Spire Missouri that begin Aug. 1, totaling 512,240 Dth/d.

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S&P Global Market Intelligence's analysis, which used SNL Energy's Index of Customers and tariff data, covered U.S. interstate gas pipeline contracts with maximum daily transportation of at least 100,000 Dth and their estimated reservation charges, if available. Pipelines provide transportation to shippers such as gas 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 that is based on the volumes to compensate pipelines for their variable costs.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found in the sources section.