Some of the “most pronounced” turnback activity for long-termfirm capacity can be expected this year and next, according to ananalysis of the pipeline transportation market issued by the EnergyInformation Administration (EIA) yesterday.

The EIA predicts that 8 trillion Btus per day, or 9% oflong-term contracted capacity, could be turned back to pipelinecompanies between 1998-2003; 6 TBtus/d in 2004-2008; and 3.8TBtus/d in 2009-2005. All told, 17.8 TBtus/d of daily capacity willlikely be returned to pipelines over this period, it said.

That’s about one-fifth of the total 97 TBtus/d of firm capacityunder contract on July 1998 on 64 pipelines that were included inthe EIA analysis. The analysis, “Contracting Shifts in the PipelineTransportation Market,” is part of an upcoming EIA report -“Natural Gas 1998: Issues and Trends” – that’s due to be releasedlater this month.

Not surprisingly, the EIA reports the Midwest likely will faceone of the largest exposures to turned-back capacity, particularlyin the 1999-2003 period. In the Midwest, it sees contracts forabout 11.7 TBtus/d of pipeline capacity expiring during thattimeframe, or about 56% of the capacity that was under contract forthat region in mid-1998. The anticipated contract expirations inthe Southwest and Central regions are likely to be even moresignificant, however. The EIA projects 68% of the capacitycurrently under contract in the Southwest will expire by 2003, andthat will be followed by 60% in the Central region.

The big surprise was the Northeast region, which came in withone of the lowest contract expiration rates for the 1999-2003period. The EIA estimates about 12.8 TBtus/d of pipeline capacitywill expire in the Northeast during that timeframe. That’s about40% of the 32 TBtus/d of capacity that’s currently under contractfor the Northeast region. The Southeast region had the only lowerrate, with about 32% of existing capacity under contract expectedto expire.

The EIA analysis did not assess how much of the anticipatedturned-back capacity will be remarketed. However, it did note thateven if all of it were remarketed, some loss of pipeline revenuewould occur because pipes would need to offer discounts to attractnew buyers and might not be able to recover their capital costs.

The analysis, plus other chapters of the EIA report, can beaccessed through the agency’s Internet site at www.eia.doe.gov/.

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