Transco Null Point Ushered South by Florence

September 18th, 2018 |

Hurricane Florence caused widespread wreckage across large portions of the Atlantic Seaboard over the last week, but fortunately, Transco, the primary source of natural gas deliveries into the region, was able to maintain operations without disruption.  Growing production in Northeast Pennsylvania has led to a longer-term trend of Transco’s null point continuing to move south, a topic we’ve been watching closely in anticipation of projects like Atlantic Sunrise, Mountain Valley Pipeline, and Atlantic Coast Pipeline.  As the storm battered North Carolina and South Carolina, the null point jetted south, with Northbound deliveries at the Georgia / South Carolina border dropping by around 1.1 Bcf/d.

Transco Flows

As expected, with over one million people losing power over the weekend, demand deliveries declined nearly 0.7 Bcf/d September 14-16 versus the prior week.  While demand slumped from September 14-16, production has remained relatively stable, with Northeast Appalachia production receipts falling about 200 MMcf/d, well within normal variability for daily production.  Declining demand combined with relatively stable production facilitated the null point moving further south, and as the chart on the left below shows, resulted in lower average Transco Z5 prices.

Atlantic Seaboard Demand Northeast PA Production
*Note: preliminary demand and production data indicate that demand returned to pre-storm levels on September 17, but production receipts decreased by as much as 0.5 Bcf/d on September 17-18

While Transco appears to have continued operating without issue, infrastructure stability is top of mind following the series of Columbia Gas explosions in Massachusetts and the explosion on Rover’s Revolution pipeline last week.  Earlier this year, Leach XPress also shut down for over a month following an explosion in June.  Atlantic Sunrise’s startup has been delayed nearly one month already due to heavy rain, and authorization for Rover’s laterals were delayed until progress was made for slips and erosion control.  With the remnants of Hurricane Florence moving out of Appalachia towards New England, the market is watching to see how existing pipelines and those under construction fare with more precipitation.

Florence Rainfall and Appalachia Pipelines

With many large projects ongoing or recently beginning startup, including Nexus, Mountaineer XPress, Gulf XPress, Rover, Atlantic Sunrise, Mountain Valley Pipeline, and Atlantic Coast Pipeline, disruptions to operations and/or construction timelines could have significant implications for both production and pricing.  Stay apprised of the latest infrastructure developments by signing up for our free Energy Market Commentary articles (like this one) and get more detail on the outlook for infrastructure development, production, and prices in the Northeast Gas Outlook.