Discount for gas widens as TETCO reduces pressure

Texas Eastern Transmission Pipeline system.

The discount for natural gas in Pennsylvania compared with gas at Henry Hub widened in June as Enbridge’s Texas Eastern Transmission (TETCO) pipeline reduced pressure by 20% between two key compressor stations, according to a recent report from the U.S. Energy Information Administration.

TETCO reduced pressure between the Uniontown compressor station in southwest Pennsylvania and the Kosciusko compressor station in central Mississippi after the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA) declined to renew a previous waiver to its required pressure reductions.

PHMSA ordered the pipeline company to reduced pressure on the line after an explosion on TETCO’s line 15 in August 2019. The agency amended the order in June 2020 after a separate explosion on Line 10, which runs parallel to line 15. In December 2020, PHMSA gave TETCO permission to run Lines 10, 15 and 25 (which also runs parallel to Line 15) to full pressure, provided it reapply for the full waiver every 90 days.

On May 28, PHMSA declined to renew the waiver and TETCO reduced pressure between  the two compressor stations on June 1. That decline in pressure led to a reduction in southbound capacity from about 1.8 Bcf/d on May 31 to 1.1 Bcf/d on June 2, a decrease of 39%, TETCO reported.

The drop in southbound capacity led to a widening of the discount for gas in Eastern Gas South in southwest Pennsylvania relative Henry Hub. Some of that discount was lost after Northeast prices rose in response to warmer than usual temperatures that increased power demand for cooling and led to higher natural gas consumption for power generation, the EIA reported.

TETCO declared a force majeure on May 28 and later announced that the earliest the 30-inch pipeline between Kosciusko and Uniontown will be restored to full service late in Q3.