On October 4, 2016 Genscape noticed an increase in southbound flow on TETCO as a result of Phase One of the Gulf Markets Expansion project coming online. This project allows for an incremental 350 MMcf/d southbound on TETCO from the constrained Appalachian production area to the MidCon and Gulf markets, where prices are higher. Three shippers (Mitsubishi, Range Resources, and Equitrans) have contracted for the full capacity.
Phase One of this project involved modifications at Wheelersburg, Owingsville, Egypt, Mt. Pleasant, Union Church, and Opelousas compressor stations on TETCO. Phase Two, which is expected in late 2017, adds additional capacity to the southern portions of TETCO through modifications at Gillis and Opelousas compressors and the addition of the new Provident City Compressor Station in Texas.
Prices in TETCO M2’s 30” receipt zone have already shown improvement as a result of the expansion. The price spread between TETCO’s M1 region and the southern markets of Tennessee, Kentucky, and Mississippi, which trade at a seven-day average cash price of $2.95, strongly incentivizes southbound flow. Before the project came online, the seven-day average for TETCO M2’s cash price was $0.69. Now the hub is trading at ~$0.83, and Genscape anticipates this uplift in local prices will persist.
Genscape has confirmed with Spectra that Phase One of the Gulf Markets Expansion is online and available for nominations.
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