Despite lower prices and demand destruction in the natural gas market, this year so far has been a "bumper year in terms of capacity release activity," says the head of a Massachusetts-based company that tracks capacity release activity on more than 50 pipelines.
Daily capacity releases during the first eight months of this year rose 25% to 10,964,866 Dth/d this year from 8,771,045 Dth/d for the comparable period in 2008, according to a report issued by Capacity Center. The number of releases increased 17% to 17,972 during the first eight months from 15,360 for the same period in 2008 .
"The significant increases in activity, as well as the shifting dynamics of particular pipelines, is mostly likely caused by a couple of key factors, such as the elimination of price caps last year, demand destruction's impact and storage market dynamics. These factors are creating new players, different profit-making opportunities and a lot of scrambling," said Capacity Center President Greg Lander (see NGI, June 23, 2008).
"The two most significant shifts are deal volumes done outside of bidweek and activity level increases on particular pipelines...More than a third of all deals are now taking place outside of bidweek, an increase of nearly 50% compared to years past," the report said.
"Deal activity across pipelines shifted dramatically in 2009 versus 2008. Among the notable changes are Texas Eastern [Transmission], which jumped from outside of the top 20 to number 3; NGPL [Natural Gas Pipeline Company of America] moved up seven spots to number 11; and Iroquois [Gas Transmission] made the top 20 for the first time with an increase in traded volume of 187%," according to the Capacity Center report.
"We are seeing several key new entrants buying and trading capacity release and believe this will continue to drive the shift in market trends for the rest of the year and beyond," Lander said.
With respect to capacity release volumes, the top 10 pipelines during the first eight months of this year were Transcontinental Gas Pipe Line, with capacity release volumes of 1,768,411 Dth/d, up 129% over the comparable period in 22008; Tennessee Gas Pipeline, 1,215,978 Dth/d, up 145%; Texas Eastern, 720,535 Dth/d, up 743%; Southern Natural, 718,296 Dth/d, up 172%; Algonquin, 600,586 Dth/d, up 102%; Columbia Gas, 554,022 Dth/d, up 103%; Dominion, 425,991 Dth/d, up 95%; Northwest Pipeline, 380,002 Dth/d, up 87%; Columbia Gulf, 320,383 Dth/d, up 91%; and Panhandle Eastern, 317,734 Dth/d, up 169%.
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