As oil and natural gas infrastructure continues to limp back to service following Hurricanes Rita and Katrina, many eyes in the natural gas industry are focused on the Henry Hub near Erath, LA, a physical delivery point that is used as a benchmark for the Nymex futures contract. The hub has been offline since Sept. 22, and no one will even speculate on when it will be back to normal (see Daily GPI, Sept. 27, Sept. 28, Oct. 6).
As of Thursday, Sabine Pipe Line LLC, operator of the Henry Hub, said that six of the 13 pipelines that run through the Henry Hub were operational in some form. However, even though the interconnects were open for nominations, pipe flows were mostly non-existent.
According to Bentek Energy’s daily Gulf Flow summary estimate, the only Henry Hub-connecting pipes expected to be in action Thursday were Columbia Gulf and Gulf South. The Golden, CO-based consulting firm said Gulf South was expected to have a 2.5% utilization rate Thursday, delivering about 174,005 Dth/d to the Henry Hub, while Columbia Gulf was expected to be at 100% utilization, taking about 155,000 Dth/d from the hub.
All other pipeline points were at 0% utilization, while on a normal day hundreds of thousands of dekatherms would be coming or going from the hub.
In addition to the meters at Gulf South and Columbia Gulf, the other interconnects that have been removed from force majeure are NGPL to Sabine, Sabine to Acadian, Jefferson Island to Sabine, Trunkline to Sabine and Sabine to Trunkline. However, Sabine said Thursday that Trunkline has not confirmed readiness to accept nominations at the Trunkline/Sabine location.
Also on Thursday, Sabine announced that its force majeure will be lifted for Friday’s gas day at:
A force majeure remains in place for other points at the hub, including Southern Natural, Texas Gas, Bridgeline, Transco, Sea Robin. As for when the Henry Hub would be completely back online, that answer was still unknown.
“We’ve drained the Henry Hub complex of water and we continue to work to restore the facility,” said Mickey Driver, a spokesman with Chevron Corp., which owns Sabine Pipe Line LLC, operator of the Henry Hub. “We’ve lifted force majeure at several of the interconnects where metering capabilities have been restored. These points are also where pipelines are capable of facilitating deliveries without the need for compression. We don’t have compression at the hub right now.”
Addressing the low flow numbers, Driver said, “The whole compression thing is responsible. The flow that is taking place is occurring because there is compression somewhere along those pipelines to move the gas along. The other thing is metering, which is essential to knowing what’s coming or going. Some of that stuff suffered damage during the hurricane, so it needs to be replaced.”
He added that there is no current timeline for getting the hub back to working order. “We need to get the hub compressors online, and we are working hard to get that done,” Driver said. “As soon as we get that up and running, things will be in a lot better shape than they are right now.”
In order to have wholesale trading to resume at the hub, Driver said everything obviously needs to be fixed first. “There are teams in there working virtually around the clock to get the facility back up and running,” he said. “The main thing will be getting the compression reestablished. We don’t have a timeline or a target date, or even any speculation on when the work will be done right now.”
One industry expert noted that the Henry Hub is very limited now in what it can and cannot do. “When it reopened a few days ago, everyone got carried away and started trading it. It turned out that most of the gas couldn’t actually get into the hub, and so people who bought that gas were subsequently cut,” he said. “Right now, the only gas that is getting into the hub is gas from Gulf South. Only Columbia Gulf is able to accept deliveries from the hub. Jefferson Island Storage gas is also open, but no gas flowed there Thursday.”
The source noted that in recent days, Sabine has said that it can accept gas from various pipes and systems, but that doesn’t mean those points can actually deliver the gas. That has been the problem, and the result has been a rash of people getting cut.
The IntercontinentalExchange (ICE) announced Thursday that Henry Hub physical gas products including same-day, next-day and balance-of-the-month trading, would be available for use on the ICE trading system on Friday. But even with trading restarted on the online trading site, the source believes the responsibility to figure out which gas can actually be delivered to the hub will fall on schedulers at the various trading companies.
“The hub has no power and no compression right now,” he said. “Gas can only flow from high pressure to low pressure. I think trading will return, but it will be limited and the price may not be very indicative when compared against surrounding points. In the meantime, the market is already circumventing the hub to get the gas into these pipelines and to the marketplace. This will continue. It will take some time for this to be a normal market.”
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