May 1 was the first day of full commercial operation of Phase I of the CenterPoint Energy Gas Transmission Carthage-Perryville Pipeline (CP Line), and it has proven a "Mayday" for South Louisiana gas supplies trying to find their way to market, according to a report from Bentek Energy LLC.
On May 1 CP Line capacity went from its initial 200,000 MMBtu/d to 960,000 MMBtu/d. The line initially had one receipt point at Carthage (Energy Transfer's Houston Pipe Line) and one delivery point at Perryville into Columbia Gulf Transmission (CGT). The pipeline now has interconnects with the Trunkline and Texas Gas pipelines.
According to Bentek, East Texas gas moving on the CP Line jumped from the low 600,000 MMBtu/d area in the last few days of April to more than 1 million MMBtu/d since May 1. Prior to April 20, volumes had been running about 300,000 MMBtu/d. May exports from East Texas are up 99%, or 1.3 Bcf/d, compared to the year-ago period, Bentek said.
Bentek's modeling shows that the gas is being sourced from Energy Transfer's Houston Pipe Line as volumes received by the CP Line jumped from about 300,000 MMBtu/d in the last few days of April to more than 700,000 MMBtu/d beginning May 1.
And the vast majority of the gas is moving onto CGT, according to Bentek. "A pittance is moving into Trunkline." Flows from the CP Line into CGT jumped from about 300,000 MMBtu/d in the last week of April to almost 850,000 MMBtu/d since May 1.
"The CP Line already is having an impact on Carthage basis and the Carthage-to-Columbia Gulf Mainline price spread," Bentek noted last Friday. "In one week, Carthage basis has gone from a minus 49 cents to minus 28 cents. The Carthage price spread to CGT Mainline has dropped to minus 28 cents from minus 52 cents on Thursday, April 26. Houston Ship Channel moved to a 7-cent premium over Henry Hub from a 16-cent deficit a week ago."
The Golden, CO-based pipeline analysts said the influx of gas from East Texas at North Louisiana's Perryville is backing up supply into South Louisiana. "[A]nd until CGT and other pipelines can bolster interconnections and capacity to provide more of an outlet for all that gas, prices could weaken at Henry Hub, causing widespread changes to basis relationships."
Bentek noted that the CP Line (see Daily GPI, April 13; March 21, 2006) is only the first of several expansion projects coming out of East Texas and the Midcontinent. Combined, projects on the boards could bring up to 4.5 Bcf/d of new supplies to Perryville, Bentek said. "A number of LNG [liquefied natural gas] import projects and associated pipelines also are being built that could further depress the Gulf Coast market in the coming years," Bentek said.
Last month El Paso Corp.'s Tennessee Gas Pipeline said it plans to expand its Carthage Line to meet the growing gas needs of a power generator in Louisiana. The project would add 100,000 Dth/d of capacity from Carthage to a new interconnect with Entergy Corp.'s Perryville generation station in Ouachita Parish, LA (see Daily GPI, April 19).
For its part, CGT has a project called Evangeline that would add 60,000 Dth/d of capacity by Nov. 1 at the pipeline's interconnection with Transco at Station 50, Bentek said in its note. A CGT spokesman told NGI that the company has yet to announce an open season for the project, and he was reluctant to say anything more as the project has only been announced to customers through the pipeline's bulletin board. CGT also plans to make its Rayne Compressor Station bidirectional, according to Bentek. This would serve markets on Southern Natural Gas' Shadyside Expansion and at Transco Station 65 where the Transco-Terrebonne interconnect would be reactivated. "In addition, CGT plans to add 5,000 hp of compression at Henry Hub to expand existing deliveries to the hub by about 230,000 Dth/d by Nov. 1, 2008," Bentek said.
The second phase of the CP Line is scheduled for completion this summer and will bring the line's capacity to about 1.2 Bcf/d, Bentek noted. An interconnect with CenterPoint and Spectra Energy's Southeast Supply Header is expected to enter service in summer 2008. The new CP Line will move East Texas gas into the backyard of Henry Hub, Bentek noted.
"Over the past few months, the marginal market for supply out of East Texas has been Chicago via NGPL," Bentek said. "As Carthage-to-Perryville gas transitions out of this marginal market to the Perryville interconnects with CGT, Trunkline, Texas Gas and ANR, gas flows out of Henry Hub into these pipelines will likely be impacted."
Bentek said that regional gas flows already are being affected by this development. Gas is being diverted south of CGT's Rayne point. "CGT is working to reverse flows from Perryville into Henry Hub and other pipeline connections in the South Louisiana area, potentially resulting in broad impacts to long-term basis relationships," Bentek said.
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