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Major gas pipelines face over 4.6 million Dt/d of expiring contracts in Q4

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Major gas pipelines face over 4.6 million Dt/d of expiring contracts in Q4

Houston — Major US natural gas pipelines have more than $10 million in the balance with over 4.6 million Dt/d of firm transportation contracts scheduled to roll off during the fourth quarter, according to an analysis of S&P Global Market Intelligence data.

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While Loews Corp.'s Texas Gas Transmission LLC could take the biggest hit in terms of total dollars, with a contract expiring at the end of December worth $2.8 million in monthly revenues, that agreement only accounts for 6.5% of the 5,975-mile bidirectional pipeline's capacity. Texas Gas Transmission provides Gulf Coast customers with supplies from the Marcellus and Utica shales.

Select contracts expiring during Q4'20
Pipeline, shipper name
Contract start date
Contract end date
Contract maximum daily transportation quantity (Dt)
Contract volume/total contracted volume for pipeline (%)
Dominion Energy Transmission Inc.
J. Aron & Co. LLC
06/01/14
11/03/20
150,000
1.7
Enable Gas Transmission LLC
Entergy Arkansas LLC
05/01/11
12/31/20
126,000
2.9
ETC Tiger Pipeline LLC
Shell Energy North America (US) LP
12/01/10
11/30/20
500,000
23.1
Ovintiv Marketing Inc.
12/01/10
11/30/20
400,000
18.5
Fayetteville Express Pipeline LLC
Riverbend Oil & Gas VIII LLC
11/01/18
12/31/20
125,000
6.8
Merit Energy Co. LLC
08/01/11
12/31/20
375,000
20.3
Southwestern Energy Services Co
12/01/10
12/31/20
1,200,000
64.9
Gas Transmission Northwest LLC
Pacific Gas and Electric Co.
11/01/09
10/31/20
279,968
9.1
Gulf South Pipeline Co. LP
Aethon III Hv LLC
11/01/10
10/31/20
110,000
1.0
Ovintiv Marketing Inc.
11/01/10
10/31/20
150,000
1.4
Texas Eastern Transmission LP
ConocoPhillips Co.
11/01/10
10/31/20
345,000
2.5
PSEG Energy Resources & Trade LLC
10/30/19
10/31/20
120,000
0.9
Texas Gas Transmission LLC
Flywheel Energy Marketing LLC
04/01/19
12/31/20
300,000
6.5
TransColorado Gas Transmission Co.
Hartree Partners LP
04/01/20
10/31/20
140,000
22.6
Transwestern Pipeline Co. LLC
BP Energy Co. Inc.
11/01/18
12/31/20
200,000
9.8
Wyoming Interstate Co. LLC
Anadarko Energy Services Co.
11/01/10
11/30/20
115,000
3.1
Data compiled Nov. 3, 2020.
Includes contracts with a contract maximum daily transportation quantity over 100,000 Dt.
Source: S&P Global Market Intelligence

Representatives of Loews had not responded at the time of publication to requests for comment on whether the capacity set to expire had been recontracted.

ETC Tiger Pipeline, meanwhile, could see about 41.7% of its contracted capacity roll off when agreements with drillers Shell Energy North America (US) and Ovintiv Marketing Inc. end Nov. 30, with Shell's firm reservations alone potentially costing $2.1 million in monthly revenues.

The 200-mile Energy Transfer pipeline from Texas to Louisiana also faces a legal showdown with Chesapeake Energy in the US Bankruptcy Court for the Southern District of Texas over a firm transportation agreement accounting for 23% of its contracted capacity due to expire at the end of 2030.

The Federal Energy Regulatory Commission declared in an order that, while Chesapeake can move to reject a contract in bankruptcy court without agency approval, this rejection does not alter regulatory obligations under the Natural Gas Act.

Kinder Morgan's TransColorado Gas Transmission could lose 22.6% of its contracted capacity and Wyoming Interstate could lose 3.1% as transportation agreements worth $3 million in monthly reservations roll off.

Fayetteville Express Pipeline, a joint venture between Kinder Morgan and Energy Transfer, could also see 92% of firm reservations expire at the end of December. Both Kinder Morgan and Energy Transfer declined to comment on whether the capacity set to expire on their pipelines had been recontracted.

S&P Global Market Intelligence's analysis, which used an index of customers and tariff data, covered US interstate gas pipeline contracts with maximum daily transportation of over 100,000 Dth/d and their estimated reservation charges, if available.

Pipelines provide gas transportation service to shippers such as 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 based on volume to compensate pipelines for their variable costs. S&P Global Market Intelligence estimates of monthly reservation revenue used the maximum revenue, because negotiated rates are often not disclosed.

Select contract revenue data for contracts expiring during Q4'20
Pipeline, shipper name
Contract start date
Contract end date
Contract maximum daily transportation quantity (Dt)
Estimated monthly contract reservation revenue ($)*
Dominion Energy Transmission Inc.
J. Aron & Co. LLC
06/01/14
11/03/20
150,000
625,155.0
ETC Tiger Pipeline LLC
Shell Energy North Am (US) LP
12/01/10
11/30/20
200,000
2,116,500.0
Gulf South Pipeline Co. LP
Ovintiv Marketing Inc.
11/01/10
10/31/20
150,000
1,521,000.0
Texas Gas Transmission LLC
Flywheel Energy Marketing LLC
04/01/19
12/31/20
300,000
2,781,900.0
TransColorado Gas Transmission Co. LLC
Hartree Partners LP
04/01/20
10/31/20
140,000
1,304,716.0
Wyoming Interstate Co. LLC
Anadarko Energy Services Co.
11/01/10
11/30/20
115,000
1,714,156.0
Data compiled Nov. 3, 2020.
Includes contracts with a contract maximum daily transportation quantity over 100,000 Dt and with an available estimated monthly contract reservation revenue.
* Based on estimates of monthly transportation reservation revenue made by S&P Global Market Intelligence.
Source: S&P Global Market Intelligence

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