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EIA: northeast natural gas spot prices fall as pipelines fill

Published by , Editorial Assistant
World Pipelines,

Natural gas flows out of the northeast region into the rest of the US averaged more than 16 billion ft3/d during September – between 1 billion ft3/d and 2 billion ft3/d more than in previous months, according to data from Genscape. The movement of natural gas has increased as natural gas spot prices have declined in the northeast and as production in Appalachia has continued to grow.

During the past three weeks, natural gas prices at Appalachian supply hubs, Dominion South and Tennessee Zone 4 Marcellus, fell from about US$2/million British thermal units (million Btu) in mid-September to lows of 76¢/million Btu and 65¢/million Btu, respectively, on 4 October. The resulting average price difference of US$1.59/million Btu lower than the Henry Hub national benchmark was the widest price gap since 5 October 2018. In both instances, northeastern pipelines had declared force majeure – a declaration used when unforeseeable events prevent companies from fulfilling their contractual obligations.

Lower prices in recent weeks have resulted in more favourable economics for transporting natural gas volumes from the northeast to other regional demand markets, notably those in the South Central and Midwest regions. Natural gas spot prices in southwestern Pennsylvania, at Dominion South, and in northeastern Pennsylvania, at Tennessee Zone 4 Marcellus, typically averaged 20¢/million Btu to 50¢/million Btu lower than Henry Hub prices this spring and summer, and this discount began to widen in August.

In September, the average natural gas spot prices at these hubs was 83¢/million Btu lower than the Henry Hub average, and the difference to Henry Hub widened to an average of US$1.59/million Btu lower on 4 October. Similarly, the price gap between Appalachian Basin natural gas spot prices and those at the Chicago Citygate widened from 20¢/million Btu earlier in 2019 to 94¢/million Btu on 4 October.

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