New NatGas Pipes Spark Trading at Clarington, Transwestern San Juan, NGI Reports

DULLES, Va.--(BUSINESS WIRE)--The build-out of natural gas pipeline infrastructure in recent years has contributed to the efficiency of the nation's delivery grid as previously stranded gas can now reach high-demand markets. New trading activity and pricing locations have emerged, prompting Natural Gas Intelligence (NGI) to establish new price indices for Transwestern Pipeline’s San Juan (TSJ) connection in the Southwest and the Clarington, OH, terminus of Rockies Express (REX).

In the case of Clarington, it was obvious what drove the need for a new index. The completion of mega-pipe REX with the extension of REX-West to Lebanon, OH, had already tightened Rockies basis relative to the central Henry Hub in Louisiana to the point that on a few occasions last year gas in Colorado had traded at parity or slightly above Henry Hub, a producer noted. Then, despite a force majeure event in mid-November that shut down five Clarington-area delivery points until late January, the greater access to Rockies supplies (along with rapidly increasing Marcellus Shale production in the Northeast) was expected to eventually weaken the Northeast's reputation as the typically most expensive market area in North America.

The case for TSJ was a little harder to pin down, but a couple of sources pointed to the start-up of service on the pipeline's Phoenix Lateral in Arizona about a year ago, making TSJ a more important pricing point.

Bentek Energy analyst Rocco Canonica said the Phoenix Lateral likely was the primary factor in driving the emergence of TSJ as an index-worthy point. Total San Juan Basin production so far this year is 2.7 Bcf/d in Bentek's gas flow survey, down from a 2.9 Bcf/d average in 2009, Canonica said. However, Transwestern volumes from the basin were up slightly to 1.2 Bcf/d last month as opposed to averaging 1.1 Bcf/d in 2009.

Energy Transfer Partners (ETP) announced the completion of Transwestern's Phoenix Expansion Project in late February 2009. The Phoenix Lateral added 500 MMcf/d of capacity (with the capability of expanding to 1 Bcf/d) to meet the gas needs of Phoenix and surrounding areas, ETP said.

New pricing points are added to NGI’s daily and monthly price surveys when market activity increases at new locations.

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Intelligence Press Inc. is an independent publishing company serving the energy industry since 1981 with leading news and price survey reports for the natural gas market in its publications: Natural Gas Intelligence, Daily Gas Price Index, Weekly Gas Price Index and Power Market Today.

Intelligence Press began publishing the industry's first natural gas price survey in 1983 when natural gas began to trade competitively. The voluntary survey and NGI's methodology has evolved with the market from reporting in the beginning simply a weekly range of prices in the five major production areas to the current reporting of daily, weekly and monthly (bidweek) price ranges, averages, volumes and number of deals at nearly 100 locations across the United States and Canada.

The publisher offers real-time news on natural gas and power market developments at http://intelligencepress.com. Additionally, Intelligence Press provides historical price data, publishes natural gas infrastructure, storage maps and glossaries.