Increasing reliance on natural gas-fired power generation in the Dallas-Fort Worth Metroplex has created a ready and willing market on the demand side of the Tolar Hub in Tolar, TX, while gas from the Barnett Shale and other area shale plays ensures abundant supply, according to hub operator NorTex Midstream Partners LLC.

The foundation of the Tolar Hub is operator NorTex’s high-deliverability Worsham-Steed Gas Storage Facility, which has interconnects with five intrastate pipelines with more than 2 Bcf/d of takeaway capacity and 1 Bcf/d of metering capacity. Worsham-Steed has 23 Bcf of storage capacity and 450 MMcf/d of maximum withdrawal capability.

Recently NorTex along with IntercontinentalExchange (ICE) launched an ICE trading point at the hub.

“Our Tolar Hub is the first ICE trading point for natural gas in North Texas and offers transparent fixed pricing, index pricing and basis trading,” said NorTex Vice President John Holcomb. “We believe this greatly improves our value to market participants by increasing liquidity, counterparty visibility and overall trading activity.”

NorTex Midstream CEO Rob Foss told NGI the partnership has several large marketers that take storage capacity, ostensibly for seasonal arbitrage, “but we see activity under their contracts that would indicate that they also have contracts with power generators to help serve their load, so they swing on their storage.”

The Metroplex power market is one of the largest and fastest growing in the country, with more than 60% of installed capacity now being fueled by natural gas, NorTex said. Use of the storage facility for power generator load-following has been increasing during the last year, Foss said, noting that “it’s a real focus of mine.

“Right now we have been capturing business with existing generation that’s out there, and we’re always talking with people who are looking to build new plants to see if there’s ways we can help them.”

Foss said the Worsham-Steed facility has had its pipeline connections for several years. The addition of compression at the facility last year sparked the effort at the partnership to move it to a traded hub. “Really, in the last 12 months it has started to function in a hub manner,” he said.

The partnership and ICE have been “really pleased with the volume” traded at the hub so far. Foss said volume has been around 20,000-30,000 MMBtu/d. “We talked with ICE, and they were at first hesitant because they were afraid there wasn’t going to be much activity. We both feel very happy with the initial activity and we’re just going to watch it develop,” Foss said.

Most of the gas, about 70% or more, moving through Tolar comes from the Barnett Shale, according to Foss. Right now, like at other storage facilities, “we’re dang near full,” he said. “From an operational standpoint, it requires a little more diligence on our part just to maintain system integrity and make sure that people don’t get complacent about their roles and responsibilities…”

Hourly scheduling by power generators has been increasing demand for storage services that can accommodate their needs. “…[N]ow if the wind [power] just falls off, these [gas-fired] plants if they’ve bid into the standby market they could need to be on in 90 minutes depending on what kind of facility they are. And so they need to call on that gas much more quickly,” Foss said.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.