The number of natural gas market centers in the United States and Canada has remained essentially constant since the late 1990s, but that's about to change as evolving supply basins and pipeline infrastructure dictate gas shipper needs, the Energy Information Administration (EIA) has found. EIA said six new market centers could be placed in service in the next four to five years.
Market centers -- which first began to develop in the 1980s following FERC's Order 436, specifying open-access transportation -- offer shippers pipeline interconnections and provide physical and administrative support that used to be provided by pipelines as bundled sales services. Last year there were 33 operational market centers -- 24 in the United States and nine in Canada. A number have seen significant expansions in recent years.
The Perryville Hub in northern Louisiana, which is owned and operated by CenterPoint Energy Inc., saw the most growth, EIA said. Perryville is on the pipeline corridor that runs from the Barnett Shale in North Texas to markets in the Southeast and Northeast. The White River Hub in western Colorado is the newest market center. It is owned by a partnership of Enterprise Products Partners LP and Questar Gas Co. and was created to service Piceance and Uinta basin producers with access to multiple intrastate and interstate pipelines.
The six market centers proposed or in development are:
Except for the Marcellus Eastern Access Hub, "these potential market centers are predicated upon the development of high-deliverability underground natural gas storage facilities," EIA said in its update on market centers, which was released this month. Mobay, Mississippi, Waha and Houston Hub are under construction. Copiah has been approved by the Federal Energy Regulatory Commission, and development of Marcellus Eastern depends upon development of the Marcellus Shale gas play.
"Between 2003 and 2008, the operational profile of many of the U.S. natural gas market centers changed markedly," EIA said. "Estimates indicate that transportation activities at U.S. market centers increased on average about 39%, with at least 16 of the 24 showing an increase in average daily throughput activity of 10% or more." Additionally, EIA found that among the market centers, total average pipeline interconnect capacity increased about 50% during the five-year period as six market centers added two or more pipeline interconnections. Three market centers experienced no growth, and only one -- the Midcontinent Market Center in Kansas -- lost both interconnections and capacity.
Besides the six new market centers, several areas of the country offer the potential to host additional market centers, EIA said. For instance, several pipelines have proposed making interconnections with the Rockies Express Pipeline, which could lead to a new market center in Ohio or the surrounding area, EIA said.
"Another area of potential market center development is in northern Louisiana," EIA said. "Currently, the Perryville Hub...is the only market center in the area." Lehman Brothers, which used to own Eagle Energy Partners, had proposed developing the Eagle Hub. However, that project collapsed with the bankruptcy of Lehman Brothers Holdings and the sale of Eagle (see NGI, Oct. 6, 2008). "The original proposal recognized the potential need for another market center in the northern Louisiana area, which could be acted on by another party in the future, especially if natural gas production in the Barnett shale area of East Texas continues to expand and development of shale gas in the Haynesville formation in northern Louisiana takes place as anticipated," EIA said. A number of industry watchers are anticipating significant congestion around the Perryville Hub (see NGI, April 6).
EIA also noted that Enbridge Energy Partners LP and others have sought interest from shippers in the potential for market centers in the Carthage area of northeast Texas and in the Orange County area of southeast Texas. "To date, however, not enough interest to open these new market centers has been found, but that may change in the future," EIA said.
The report is available at www.eia.doe.gov under "Natural Gas" and "Analyses."
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