EIA Sees Major Turnback Activity Through 2003
Some of the "most pronounced" turnback activity for long-term
firm capacity can be expected this year and next, according to an
analysis of the pipeline transportation market issued by the Energy
Information Administration (EIA) yesterday.
The EIA predicts that 8 trillion Btus per day, or 9% of
long-term contracted capacity, could be turned back to pipeline
companies between 1998-2003; 6 TBtus/d in 2004-2008; and 3.8
TBtus/d in 2009-2005. All told, 17.8 TBtus/d of daily capacity will
likely be returned to pipelines over this period, it said.
That's about one-fifth of the total 97 TBtus/d of firm capacity
under contract on July 1998 on 64 pipelines that were included in
the EIA analysis. The analysis, "Contracting Shifts in the Pipeline
Transportation Market," is part of an upcoming EIA report -
"Natural Gas 1998: Issues and Trends" - that's due to be released
later this month.
Not surprisingly, the EIA reports the Midwest likely will face
one of the largest exposures to turned-back capacity, particularly
in the 1999-2003 period. In the Midwest, it sees contracts for
about 11.7 TBtus/d of pipeline capacity expiring during that
timeframe, or about 56% of the capacity that was under contract for
that region in mid-1998. The anticipated contract expirations in
the Southwest and Central regions are likely to be even more
significant, however. The EIA projects 68% of the capacity
currently under contract in the Southwest will expire by 2003, and
that will be followed by 60% in the Central region.
The big surprise was the Northeast region, which came in with
one of the lowest contract expiration rates for the 1999-2003
period. The EIA estimates about 12.8 TBtus/d of pipeline capacity
will expire in the Northeast during that timeframe. That's about
40% of the 32 TBtus/d of capacity that's currently under contract
for the Northeast region. The Southeast region had the only lower
rate, with about 32% of existing capacity under contract expected
The EIA analysis did not assess how much of the anticipated
turned-back capacity will be remarketed. However, it did note that
even if all of it were remarketed, some loss of pipeline revenue
would occur because pipes would need to offer discounts to attract
new buyers and might not be able to recover their capital costs.
The analysis, plus other chapters of the EIA report, can be
accessed through the agency's Internet site at www.eia.doe.gov/.
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