Excellent Update On Natural Gas Pipeline Activity In Louisiana And What It Means -- RBN Energy -- October 10, 2014

Active rigs:

	10/10/2014	10/10/2013	10/10/2012	10/10/2011	10/10/2010
Active Rigs	192	185	187	196	156

RBN Energy: Louisiana, Henry Hub, and natural gas.

At first glance, the recent purchase of a natural gas pipeline network in southern Louisiana by EnLink Midstream from Chevron does not look very exciting.

One of the assets - the Sabine pipeline – backbone of the Henry Hub CME NYMEX natural gas futures contract - reported losses of $7.5 Million and total flows averaging only 200 MMcf/d in 2013.

So what is the value of the pipelines tied to the world’s third largest futures contract?

Turns out the Henry Hub futures contract generates some pretty good revenue for the pipeline operator without moving a molecule of gas. And there’s a bright future ahead for gas pipeline networks in Louisiana these days. We explain why in today’s blog.

At the end of September 2014, EnLink Midstream (formed in March 2014 by a merger between Crosstex Energy and Devon Midstream Holdings) paid Chevron $235 million for three natural gas pipeline systems in Southern Louisiana – the Sabine pipeline, the Bridgeline system and the Chandeleur system.

The assets include about 1,400 miles of pipeline from Beaumont, TX, to the Mississippi River corridor.

In addition to the pipeline and storage assets, the deal makes EnLink the owner and operator of 13 major interstate and intrastate connections to the Sabine pipeline that between them form the Henry Hub delivery mechanism for the CME NYMEX natural gas futures contract.

So given that the NYMEX futures contract trades average volumes of roughly 3000 Bcf/d (that’s for all delivery contracts – it works out about 40 times the daily dry gas production of 75 Bcf/d) you would think that Henry Hub would be the busiest physical gas interchange in the world. But you would be wrong. Go to the linked article to find out why.

Bu there was more to the article that shed more light on the North American energy revolution:

Louisiana is ground zero for a renaissance in US manufacturing and processing plants being built to take advantage of abundant U.S. supplies of cheap shale gas. Louisiana will also be home to at least 4 Bcf/d of liquefied natural gas (LNG) export capacity as well as new gas fired power generation capacity in Louisiana and Florida in the next few years.

This time instead of from the Gulf of Mexico – most of the gas to feed this new demand will be coming south from the Northeast – home to prolific Marcellus and Utica gas production that has already reached nearly 17 Bcf/d (September 2014) and continues to grow rapidly. How will all that gas move south?

An RBN blog series earlier this year documented the build out of new gas pipeline infrastructure south and east from the Marcellus to the Gulf Coast – many of them reversals of pipes that previously flowed the other way. We expect about 16 Bcf/d of capacity to come online in the next five years to move gas into the Gulf Coast region.

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 Kentucky Fried Chicken -- Nevada Style -- Not Coming To California

Bakken.com is reporting:

A solar-energy company has dropped a proposal to build a 75-story solar tower near California’s Joshua Tree National Park employing a kind of solar technology that can cause birds to ignite in midair.

The California Energy Commission was slated to vote on BrightSource Energy’s project this month, before the company withdrew its application.

The plant would have used “power tower” technology that trains concentrated solar power on steam boiler towers. State and federal officials and conservation groups say a similar BrightSource tower near the Nevada border proved unexpectedly deadly to birds that flew through the concentrated rays.