NGI The Weekly Gas Market Report / NGI All News Access

If It's Monday, It Must Be Lebanon

Rockies Express Pipeline (REX) said last week it expected to have the long-awaited REX-East segment of the pipeline in service to Lebanon, OH, for Monday's gas day. The pipeline also received authorization from the Federal Energy Regulatory Commission to commence the service.

During the first few days of operation capacity to Lebanon may vary between 1,300 MDth/d and 1,600 MDth/d depending upon compressor start-up performance. When REX-East enters service the following delivery points and capacities are expected to be available:

The pipeline affirmed its earlier projections for commencing service to Clarington, OH, on Nov. 1.

"Based on what we see as contracted transport capacity for points in the Lebanon Phase," it looks like the majority of gas will go to Dominion and TETCO, said Bentek Energy LLC Managing Director Rusty Braziel, citing information from the REX Tracker page in the firm's "Midcontinent Observer" report. "Contracted capacity into TETCO is 787 MMcf/d while DTI is 583 MMcf/d. Of course, with spot transactions, interruptible transportation etc., gas will find its way to the highest-value market. Only about 180 MMcf/d is contracted into TCO (Columbia Gas). The highest values in our netback table are into Texas Gas, Dominion, TCO and Tennessee -- in that order. Those margins (based on FT incremental transport costs only; excluding FT demand charges) are all around $1.00. Big differentials these days; you've got to think that Ohio prices will come down on Monday, at least initially.

"As we've said for years, the big question is how competing supplies will respond -- especially Gulf supplies. We'll know the answer to that question soon too. It will be a very interesting week."

REX-East has been forced to delay the start of service in Ohio multiple times due to inclement weather and flooding (see NGI, May 25a). Earlier this month Kinder Morgan Energy Partners LP CEO Rich Kinder said service on REX-East to Lebanon would start by the end of June (see NGI, June 8).

The western stretch of REX already is running full or close to it and other major pipeline projects are in the works to carry gas from the Rockies producing area. REX has had significant influence on basis and the North American pipeline grid and is expected to have more, according to Bentek Energy (see NGI, May 25b).

REX updates are at www.rexpipeline.com.

©Copyright 2009 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus