Major U.S. natural gas pipelines have 1.6 million Dth/d of firm transportation contracts scheduled to roll off during the third quarter, according to an analysis of S&P Global Market Intelligence data.
Energy Transfer LP's ETC Tiger Pipeline LLC, which operates a 197-mile bidirectional system connected to the Haynesville Shale that connects to other pipelines near Delhi, La., saw over 26% of its contracted capacity roll off when a contract for 400,000 Dth/d of firm transportation with BP Energy Co. worth $4.2 million in monthly revenues ended July 31. At the time of publishing, Energy Transfer had not responded to requests for comment about whether that capacity had been re-contracted.
Ruby Pipeline LLC may also take a significant financial hit after a contract with Anadarko Energy Services Co. accounting for over 16% of its firm capacity expired at the end of July. The system connecting Opal, Wyo., and Malin, Ore., is a joint venture between Pembina Pipeline Corp. and Kinder Morgan Inc., whose CEO recently told investors the midstream giant "will be making an economic decision on this asset."
Kinder Morgan did not respond to requests for comment about whether the agreement worth $6.9 million in monthly revenues had been re-contracted. In April, S&P Global Ratings downgraded Ruby Pipeline's issuer credit rating to CCC from B- with a negative outlook due to a material financial risk that could potentially result in default.
Oneok Inc.'s Midwestern Gas Transmission Co., meanwhile, stands to lose nearly 10% of its contracted capacity when an agreement with Antero Resources Corp. rolls off Sept. 30. Oneok declined to comment on whether the bidirectional system, which serves markets in Tennessee, Kentucky, Indiana, southern Illinois and the Chicago market hub, had re-contracted that firm transportation.
Market Intelligence's analysis, which used an index of customers and tariff data, covered U.S. 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. Market Intelligence estimates of monthly reservation revenue used the maximum revenue because negotiated rates are often not disclosed.
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