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Pipe disruption contributing to Northeast gas prices drop, flow shift, EIA says

As production in the Appalachian region continues to grow, pipeline disruptions have altered the flow of gas coming out the Northeast and contributed to price shifts, the U.S. Energy Information Administration wrote in an Oct. 15 report.

In recent weeks, prices at key Appalachian supply hubs — Dominion South and Tennessee Zone 4 Marcellus — have seen significant fall-offs, dropping from $2/MMBtu in the middle of September to below $1/MMBtu, the EIA wrote, citing Genscape data. The drop-offs contributed to an average price difference of about $1.59/MMBtu compared with Henry Hub, the greatest price difference since early October 2018, the EIA wrote.

The EIA noted that in each of these cases, Northeastern pipelines had declared force majeure, impacting the available pipeline capacity in the region.

Still, flows out of the Northeast have exceeded prior months by between 1 Bcf/d and 2 Bcf/d to reach a September average of more than 16 Bcf/d, the EIA said.

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One notable change in gas flows came in the wake of a fatal blast on Enbridge Inc.'s Texas Eastern Transmission LP pipeline Aug. 1. The explosion resulted in rerouted southbound natural gas supplies out of the Northeast into other pipelines, translating to an increase in gas flows from the Northeast into Midwest markets, particularly on the Rover and Rockies Express pipelines, the EIA said.

The deadly explosion in Lincoln County, Ky., killed one person, hospitalized others and caused evacuations and extensive property damage. Federal regulators ordered Enbridge to shut down a 19-mile portion of the affected pipe, reduce pressure along the rest of the 775-mile line and take two adjacent lines out of service. The adjacent lines were restored to service as of Sept. 1, but the restrictions on the affected line remain in place.

Gas volumes from the Northeast to the Midwest have continued to rise despite the system returning to partial service, the EIA said.

On Oct. 8, the National Transportation Safety Board issued its first preliminary report into the explosion; the investigation is ongoing.