Monday, August 03, 2009
Daily cash prices in CenterPoint Energy Gas Transmission's East zone have surged this summer relative to the other Midcontinent points and to Henry Hub as new pipeline capacity alters traditional flows out of the region.
CenterPoint East has historically traded at a large discount to Natural Gas Pipeline Co. of America's Texok zone and the Carthage Hub. But since June 1, that spread has rapidly closed.
"In June, The Midcontinent Express started flowing a little bit more gas, and Gulf Crossing came back from maintenance on July 1," BENTEK analyst Jack Weixel explained. Those developments allowed more gas out of southern Oklahoma and across Texas into the Perryville hub and Delhi, Louisiana. Gas is flowing across Natural's zone, connecting CenterPoint East with the producing region, he said.
Weixel suggested that on top of the new takeaway capacity in the region, the opening of the East leg of the Rockies Express pipeline also may have contributed to the upswing in prices as it began transporting gas to Ohio that had been delivered to Oklahoma off RES-West.
"Natural's Midcontinent zone collects gas in Oklahoma while CenterPoint East collects gas east of there. When REX came through it gave a relief valve to all of the load-serving pipes, increasing demand and allowing more export capacity there," Weixel explained.
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