Growing gap in U.S. natural gas hub prices blamed on Louisiana pipeline congestion


Pipeline congestion in south Louisiana and East Texas are widening the gap in U.S. natural gas hub prices, S&P Global Platts reports.

Steep basis discounts could emerge at neighboring and even more distant U.S. pricing locations next summer, the energy and commodities publisher notes, as competition among shippers for access to the premium demand region continues to rise.

In recent trading, forwards prices at nearby hubs like Carthage and Columbia Gulf Mainline are averaging 10 cents and 24 cents/MMBtu behind Henry Hub for the June, July and August contracts.

In the Midwest and the Northeast, which continue to supply increasing volumes of gas to the Gulf Coast market, summer 2020 forwards prices are at even steeper discounts to the benchmark, S&P Global Platts reports.

Chicago is now priced 22 cents below Henry Hub gas, while Dominion South is at a 42 cent/MMBtu basis discount for the mid-summer 2020 contracts, S&P Global Platts M2MS data shows.

Congestion south of Carthage and south of Perryville in Louisiana are expected to pose serious constraints to gas moving southbound next summer.

As next summer approaches and gas transmission corridors to the Gulf Coast become increasingly congested, those price spreads could see further widening, according S&P Global Platts Analytics.

S&P Global Platts has the full story.