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NGI Monitors Natural Gas Trading at New Rockies Hub

Growing natural gas production and new pipeline infrastructure in the Rocky Mountain area have sparked the development of a new NGI price index point, the White River Hub in Colorado, at the juncture of the Rockies Express Pipeline (REX) and lines from Questar, Northwest and TransColorado. The new hub became part of NGI's daily and weekly price surveys in mid-August and its bidweek survey Sept. 1.

The White River Hub (WRH) started out near the top of the charts for Rockies pricing points, registering an initial daily average of $2.85, which compared to a range of $2.70-2.81 at the seven previously existing Rockies indexes. Its premium grew the next day to $2.90, while the rest of the Rockies ranged from $2.66 to $2.77.

However, this week WRH pricing has receded to approximate parity or slightly below neighboring locations. Only Colorado Interstate Gas' (CIG) average of $2.11 Wednesday was less than WRH's $2.14, which matched the Northwest-South of Green River number. Other Rockies points were 1-2 cents higher.

Since NGI began publishing daily prices for WRH, it has ranged from an early high of $2.94 to a Wednesday low of $2.12. In the September bidweek it was right on target with the largest volume Rockies pricing point, Opal, at $2.39.

Before WRH the last Rockies index point to be added to the NGI survey was the Cheyenne Hub in 2000. The survey has grown from 48 points in 1988 to 92 across the U.S. and Canada today.


An excerpt from the recently updated Simplified Map of Major North American Pipelines 2009-2010 created by Intelligence Press Inc.

Questar Pipeline, a subsidiary of Questar Corp., and Enterprise Products Partners announced in mid-December that service had begun at WRH in northwestern Colorado's Rio Blanco County (see NGI, Dec. 22, 2008). It connected Enterprise's processing plant at the Meeker Hub with the major pipelines. Further volumes are expected to flow when Williams' 450 MMcf/d Willow Creek processing plant is completed, which is expected by the end of September.

Natural gas flows out of the area have been increasing with the completion of succeeding segments of Kinder Morgan's 1,300-mile, 42-inch REX line, first to Missouri in May of 2008, then into Ohio this past June.

WRH consists of four miles of 36-inch diameter pipe and about seven miles of 30-inch diameter pipe, plus tie-in and metering facilities. It has a design capacity of more than 2.5 Bcf/d of firm and interruptible transportation/wheeling service, allowing producers, marketers and shippers to access downstream markets for natural gas volumes produced in northwest Colorado's Piceance Basin.

A little less than 1 Bcf/d has been flowing through WRH recently, said Shelley Wright, director of business development for Questar Pipeline, the hub's operator. The current market weakness makes it difficult to say when full capacity will be reached, she said. About 2 Bcf/d of capacity has been contracted through WRH, so obviously not all of that capacity is being utilized, Wright said.

Much of Enterprise's Meeker Plant capacity has been going into TransColorado and REX from WRH since it went into service, she said. There have also been some flows into CIG and Wyoming Interstate Co.

WRH is anticipating an eventual Colorado Hub Connection with Northwest, a 24-inch diameter lateral to Northwest's Sand Springs Compressor Station, which is under construction by Northwest and anticipated to enter service in the fourth quarter. The capacity will be about 582,000 Dth/d, Wright said. The new WRH delivery point could add additional volumes and will provide additional deliverability flexibility, she added.

It's hard to know when full WRH capacity will be reached, primarily because so many rigs have been deactivated in the Piceance Basin, Wright said. However, the fact that ExxonMobil is still actively drilling in Piceance, flowing about 100 MMcf/d currently, is a good sign for WRH, she said (see Daily GPI, July 31).

The Meeker II processing plant in the Piceance Basin began operations in mid-March (see Daily GPI, March 13), doubling capacity at the Meeker complex to 1.5 Bcf/d with the capability to extract up to 70,000 b/d of natural gas liquids. According to Enterprise, the Meeker complex is supported by long-term commitments from 10 of the largest producers in the Piceance Basin; one of them is ExxonMobil, which said in early March it would be ramping up the first phase of its Piceance Basin gas project by the end of the month (see Daily GPI, March 6). Thanks largely to the expanded capacity at Enterprise's plant, ExxonMobil, which launched its 300,000-acre Piceance Basin project development in September 2007, eventually expects to produce up to 1 Bcf/d there (see Daily GPI, June 23).

Bentek Energy analyst Sam Duran said there's not enough demand to generate full throughput at WRH yet, but that's true of the Rockies in general. Bentek has seen a hub average of about 950 MMCf/d over the last 30 days, but nominations there were down to 858 MMcf/d Thursday.

"We don't see it [WRH volume] growing anytime soon," Duran said, because of limited drilling in the Piceance Basin. Bentek considers Green River Basin as the lowest-cost production area in Rockies, especially in the Jonah-Pinedale area, but rigs are being deactivated more in the Piceance because of its higher costs, he added.

WRH has been listed on the IntercontinentalExchange online trading platform since April, and Wright thinks that has made a lot of difference in activity there. She said she was glad to hear that NGI has begun a WRH index; she was not aware of any other such index maintained by trade press publications.

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