What is Henry Hub?
The Henry Hub is perhaps the best-known of all natural gas trading points in North America. Located near Erath, Louisiana, the pipeline interchange moves gas from across the US Gulf Coast through a header system operated by Sabine Pipe Line, a subsidiary of Chevron Corporation.
The interstate and intrastate pipelines that come together at the interconnect include: Gulf South Pipeline, Southern Natural Gas, Natural Gas Pipeline Co. of America, Texas Gas Transmission, Sabine Pipe Line, Columbia Gulf Transmission, Transcontinental Gas Pipe Line, Trunkline Gas, Jefferson Island Pipeline and Acadian Gas. With the operational flexibility that comes from two compressor stations, Sabine currently possesses the ability to transport 1.8 Bcf/d across the hub.
In addition to being a very liquid spot trading point, Henry Hub is also the standard delivery point for the NYMEX natural gas futures contract in the US. The contract began trading in April 1990 and is traded 18 months into the future and is used as a primary financial hedging tool in the marketplace.