Wednesday, January 23, 2008
In its first two weeks of operation, Phase II of REX has pulled gas from other regional pipelines which previously had moved Rockies production into markets south and west of the region
DENVER (January 23, 2008) - BENTEK Energy, LLC, reported today that the company's Weekly Rockies Observer™ service reveals that deliveries from the new Rockies Express (REX) West pipeline system into ANR, NGPL and Northern Natural (NNG) have reached 438,000 MMbtu/d. As of today's scheduled flows, the NNG interconnect is at 92% capacity while ANR and NGPL are at 28% and 14% capacity, respectively. The company's analysis also indicates that most of the new capacity has been filled with gas pulled from other regional pipelines which had previously been moving that gas into markets south and west of the Rockies. Natural gas prices in the Rockies have increased significantly, with Colorado Interstate Gas (CIG) prices only $0.32/MMbtu below Henry Hub prices, according to ICE Day Ahead Indices traded on January 22, 2008.
"This interregional pipe-on-pipe competition can be expected to intensify in the coming weeks, to the benefit of Rockies producers," said Rusty Braziel, BENTEK Managing Director. "REX West is already starting to achieve the objectives of its anchor shippers, most of whom have significant gas production in the Rockies region."
REX is the $4.4 billion system owned by Kinder Morgan, ConocoPhillips and Sempra that will enable the delivery of 1.8 Bcf of supplies from areas in Colorado, Utah and Wyoming. This gas will ultimately reach markets in the Midwest and Northeast. Phase II of the REX system was placed into service on January 12, 2008, providing the ability for shippers to move gas from the Cheyenne Hub to interconnects in Nebraska, Kansas and Missouri. Phase ll will finish when REX reaches the Panhandle Eastern (PEPL) interconnect in Audrain County, MO. In early 2009, REX East (Phase III) will extend the pipeline to Lebanon and Clarington, OH, and provide a delivery capacity of 1.8 Bcf/d.
BENTEK's Weekly Rockies Observer™ service indicates that incremental Rockies production has been a negligible factor in new REX West throughput. Instead, flows shifted from regional pipelines including Cheyenne Plains and TransColorado into the REX system. In addition, REX is pulling significant gas volumes from Opal which might otherwise be flowing into Kern River, CIG or Northwest Pipeline (NWP).
According to Braziel, "It is still too early to be sure if these changes in the market are predictive. Whether these events are being driven primarily by transportation economics or other factors such as weather, mid-month contractual commitments or the fact that the PEPL interconnect is not yet in service remain open questions."
A weekly report and daily alert service from BENTEK Energy, the Weekly Rockies Observer™, provides a continuing assessment of natural gas flows, capacity and pricing in the Rockies region.
For more information about BENTEK's Weekly Rockies Observer™, go to www.bentekenergy.com or call BENTEK at 888-251-1264.