Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Natural Gas

Cheyenne Hub futures bearish despite possible connector project delays

LNG | Natural Gas | Natural Gas (North American)

LNG developers jockey for relevance at Gastech

Natural Gas | Oil

Platts Wellscape P2P

Commodities | Energy | Electric Power | Emissions | Renewables | Natural Gas | Natural Gas (North American)

Northeast Power and Gas Markets Conference, 14th Annual

Electricity | Electric Power | Oil | Refined Products | Petrochemicals

Tropical Depression Imelda brings heavy rains and flooding to southeast Texas

Cheyenne Hub futures bearish despite possible connector project delays

Highlights

Cheyenne Hub October contract $1.34/MMBtu weaker than last year

Pipeline has yet to receive FERC certificate of approval

Houston — Two of the most anticipated pipeline projects in the Rockies -- expected to enter service later in the year -- are the Tallgrass Cheyenne Connector Project and Rockies Express Cheyenne Hub Enhancement, allowing Denver-Julesburg basin gas access to eastern and western markets, which could potentially have a significant effect on regional prices.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Both projects are estimated to enter service in Q4 2019, according to the Tallgrass Energy website.

The Cheyenne Hub October contract has averaged about $1.60/MMBtu so far in August, $1.34 weaker than where cash prices settled last October.

Similarly, the winter strip was trading lower at $2.04/MMBtu Thursday, 38 cents below Henry Hub. Spot price settles averaged $3.16/MMBtu last winter, moving as high as $7.59/MMBtu.

The Cheyenne Connector Project is a 70-mile large-diameter interstate natural gas pipeline designed to receive gas from processing facilities in southern Weld County in the DJ Basin and deliver it to the REX Cheyenne Hub just south of the Wyoming border. The pipeline, with an initial design capacity of 600 MMcf/d and potential room for expansion, will link natural gas supplies from the DJ Basin to demand areas in West, Midwest, Gulf Coast and Southeast markets, bringing diversity of supply and competitive pricing.

The subsequent REX Cheyenne Hub Enhancement Project consists of modifications to the REX Cheyenne Hub to accommodate firm receipt and delivery interconnectivity among multiple natural gas pipelines, offering diversity in terms of market access.

But it has yet to receive a Federal Energy Regulatory Commission certificate approving the project. Originally scheduled to receive approval February 28 of this year in order to meet the estimated in-service date, the project appears to be at risk of delays with Q4 around the corner.

If the Cheyenne Connector is delayed and the Gulf Coast Express enters service on time, the story for the Western Slope turns from bearish to bullish as the western Rockies will likely see stronger regional basis as production gets pulled back into the Southwest.

The reversal of those current south-to-north volumes into the Rockies would pull 430 MMcf/d of supply away from the region while the Green River Overthrust and Piceance are still responsible for filling all of REX's eastbound volumes, leaving the region short nearly 500 MMcf/d, according to S&P Global Platts Analytics.

If the Cheyenne Connector is pushed by a couple months, it places the Rockies in peak winter demand with at least 400 MMcf/d less supply year on year.

Once the Cheyenne Connector does enter service, it will displace 600 MMcf/d of current eastbound volumes along REX from the Piceance and Green River basins. On the surface, this would typically be bearish for western slope prices as the region would be long 600 MMcf/d.

With Permian takeaway capacity constrained, however, gas has reversed to flow south to north into the Rockies from the San Juan Basin. Once Gulf Coast Express enters service in October and de-constrains the Permian, those south-to-north flows, averaging 430 MMcf/d this summer will likely reverse and begin flowing back into the Southwest, according to Platts Analytics.

The end result, if both projects were to come online in October, would only be an additional 170 MMcf/d of length in the western slope around Opal.

-- Veda Chowdhury, veda.chowdhury@spglobal.com

-- Jack Winters, jack.winters@spglobal.com

-- Edited by Bill Montgomery, newsdesk@spglobal.com