There is a lot of irony in the U.S. natural gas market these days – just as ET Rover is expected to bring the first greenfield pipeline capacity to debottleneck Appalachia later this year, gas production is revising higher in the SCOOP/STACK and Permian to the point where greenfield pipes are being proposed to address growth. How the U.S. gas market will balance with all these changing supply, demand, and transportation dynamics is a moving target. One of the key pipeline corridors to watch is how Appalachian production growth fueled by greenfield pipeline projects targeting the Mid-Atlantic influences flows on the Transco mainline, so today we will look at how the Transco null point rambles south.
As shown above, the influence of Appalachian production hitting Transco has pushed the ‘null point’ (an estimated point at which no gas is moving in either direction) from Virginia in 2015 to North Carolina in 2016. In 2017 YTD, 0.3 Bcf/d has flowed south at the Virginia-North Carolina border, while 2.5 Bcf/d has flowed north at the Alabama-Georgia border to serve the 2.8 Bcf/d Georgia, South Carolina, and North Carolina markets off Transco.
Above we can see the impact of changing supply dynamics on the Transco mainline over time as measured by flows at various state borders. In 2010-2013, the Transco mainline consistently flowed north as measured by flows at the Alabama-Georgia border, South Carolina-North Carolina border and the North Carolina-Virginia border. However, from 2015 forward, flows at the North Carolina-Virginia border consistently flowed south – meaning Transco demand in Virginia and parts of North Carolina are being met by Appalachian gas flowing south. Also, note that more recently flows at the South Carolina-North Carolina have dipped negative, once in Fall 2016 and again in Spring 2017. At these points in time, this analysis implies gas is flowing south on Transco as far south as into South Carolina.
So as we look forward, Appalachia has 11 Bcf/d of greenfield projects proposed to debottleneck production with 6.2 Bcf/d pointed at various points on Transco from projects including Atlantic Sunrise, PennEast, Mountain Valley, and Atlantic Coast pipeline. With the Transco null point getting as far south as South Carolina in 2017, and over 6.2 Bcf/d of new supply pointed at Transco, one might quickly jump to the assumption that the Transco null point will be pushed further south as far back as Transco Station 85 in Alabama. But, BTU’s analysis shows otherwise… BTU Analytics tracks these natural gas market dynamics in detail in two reports – request a copy of the Henry Hub Outlook or the Northeast Gas Outlook.