Interstate pipelines serving the Midwest region are at the “greatest risk” of having capacity turned back to them over the next five years, said the American Gas Association (AGA) in an “issue paper” released last week.

As of last April, Midwest pipelines had only 37% (10.1 TBtu/d) of their current contract total (27.5 TBtu/d) under contract through the year 2001, the LDC group reported. This figure “will change as capacity is remarketed,” but still the potential for a huge amount of unsubscribed capacity remains in that region.

Unsubscibed capacity likely will show up on a number of midwestern pipelines within the next few years: Natural Gas Pipeline Company of America, as of last April, had only 12% of its current contracted capacity under contract through 2001 (0.9 TBtu/d out of the 7.4 TBtu/d subscribed); Michigan Gas Storage had only 7.4% of its contracted capacity termed up through 2001 (0.2 TBtu/d out of 2.7 TBtu/d); ANR Pipeline had 68% of its contracted capacity under long-term deals (3.4 TBtu/d out of a total of 5 TBtu/d); Trunkline Gas had 42% under contracts through 2001 (0.8 TBtu/d out of 1.9 TBtu/d under contract); and Texas Gas Transmission had 41% under long-term deals, or 0.7 TBtu/d out of a total of 1.7 Tbtu/d presently under contract.

Pipelines that principally serve the Northeast corridor also will be at risk for “some” capacity decontracting by 2001. As of last April, only 9.5 TBtu/d, or 24%, was under contract through 2001 out of the current contract capacity of 39 TBtu/d, according to AGA. The pipeline facing the greatest potential for unsubscribed capacity is Tennessee Gas Pipeline, which, as of April, had only 1.2 TBtu/d, or 22%, of its current contracted capacity of 5.4 TBtu/d under contract in 2001. Other pipes that will have “significant amounts” of capacity expiring in this time period include Northern Natural Gas, Koch Gateway Pipeline and Williams Natural Gas.

However, the majority of existing contracts that expire between 2001-2005 will be on pipelines that primarily serve the Northeast, AGA said, adding that 17.1 TBtu/d of contractual capacity will terminate then. Much of this will occur on Columbia Gas, Columbia Gulf and CNG Transmission, it added. As of last April, the Columbia pipelines had only 1.8 TBtu/d (12%) under contract in 2005 out of a current contracted capacity of 14.5 TBtu/d, while CNG Transmission had only 1.7 TBtu/d (36%) under contract out of a current capacity of 4.7 TBtu/d. Unlike Tennessee Gas, Texas Eastern Transmission and Transcontinental Gas Pipe Line still will have more than half of their current capacity under contract in 2005, according to the white paper.

Overall, AGA estimates that 12% of the 104.6 TBtu/d in firm transportation capacity under contract as of last April will expire by the end of 1998, 20% will expire by the end of 1999, 28.5% will expire by the end of 2000, a full 40% will expire by the end of 2001, and 67% will expire by the end of 2005.

Susan Parker

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