Infrastructure – As demand estimates in the Southeast balloon, midstream companies are jumping at the chance to commercialize major projects to bring gas to the region. Kinder Morgan (KMI) launched a binding open season for the Mississippi Crossing project (MSX) on Tennessee Gas Pipeline (TGP), Energy Transfer (ET) is holding a non-binding open season for the South Mississippi project, and Boardwalk Pipelines has a binding open season for the Kosci Junction project on Gulf South and Texas Gas Transmission (TGT).
These projects aim to deliver more gas to the Southeast, where population growth and expanding local economies are creating new demand. All of the open seasons are targeting power generators and local distribution companies (LDCs) as customers.
The MSX project will build a new pipeline to connect the 100, 800 and 500 legs of the TGP system and deliver 1.5 Bcf/d (scalable to 2.0 Bcf/d) from Greenville, MS to new deliveries points on TGP and Southern Natural (Sonat) in southern Mississippi, or to Zone 85 on the Transcontinental (Transco) system. KMI projects an in-service of November 1, 2028.
Meanwhile, ET’s Energy Transfer Interstate Holdings (ETIH) unit is proposing to take gas from Carthage and Perryville further into the Southeast, including to Florida Gas Transmission’s (FGT) Zone 3 as a primary delivery point. The South Mississippi project is a brown/greenfield hybrid that includes a mix of new large-diameter pipelines and compressors, as well as leases and possible expansions on existing ETIH pipes. The project is currently scoped for 1.0 Bcf/d but is also scalable to 2.0 Bcf/d. ET estimates a 2Q28 in-service for the expansion.
Boardwalk’s Kosci Junction project will supply 1.5 Bcf/d from the Greenville Lateral on TGT to Clarke County, MS through additional compression and construction of an 80-mile pipeline. The expected in-service for this project is April 1, 2029. The open season indicates that negotiations are under way with one anchor shipper for 600 MMcf/d.
The latest open seasons follow on Sonat’s South System Expansion 4 (SSE4) and the Transco Southeast Supply Enhancement (SESE). These projects are expected to charge rates at least 200% higher than current firm transport (FT) tariffs for similar paths of travel, signaling a window of opportunity for midstream.
East Daley tracks and forecasts gas flows to the Southeast in the Southeast Gulf Supply & Demand Report. As companies vie for new market, will there be enough growth to commercialize all the projects? EDA sees potential for more than one. Utilities in the region have issued bullish demand projections through 2030 via independent resource plans (IRPs) that foresee electricity shortages without new investments. Based on these forecasts, the risks are high that deliveries to the Southeast could fall short in the near term as residential and commercial customers compete with LNG exports for supply.
We expect gas in the region to trade at a premium in the near term until new pipelines are built, particularly when the Plaquemines Phase 2 LNG project comes online in 4Q26. Check out our Southeast Gulf Supply & Demand Report to learn more.
Flows – Haynesville gas production has fallen over 3 Bcf/d so far in 2024, according to East Daley’s ArkLaTex Basin forecast, from 16.7 Bcf/d in 1Q to just 13.5 Bcf/d in 3Q24. Weak gas prices, steep rig cuts and deferred completions have led to lower volumes from the largest Haynesville producers. Accordingly, many of the largest gathering systems have seen serious declines as well. Energy Transfer’s (ET) system flow samples are down over 1 Bcf/d since 1Q24 while Williams’ (WMB) samples are down 600 MMcf/d over the same period.
However, DT Midstream (DTM) appears to have bucked this trend. In the latest 3Q24 earnings, DTM reported that Blue Union gathered volumes declined only 10 MMcf/d on average vs 1Q24. Management also announced that LEAP’s Phase 4 expansion made a final investment decision (FID); the new project will raise DTM’s Haynesville egress capacity from 1.9 to 2.1 Bcf/d by mid-2026.
LEAP’s interstate flow sample has actually declined by ~350 MMcf/d since 1Q24, but only because volumes have shifted over to TC Energy’s (TRP) Gillis Access project, which was placed in service in March ’24. LEAP has a 1 Bcf/d interconnect with TRP’s intrastate pipeline and has supplied ~350 MMcf/d to that line since June ’24. Currently, Gillis Access ships those volumes over to TRP’s other Louisiana interstates, mostly to ANR, but the line also connects with Columbia Gulf. We expect this supply chain eventually will allow Plaquemines LNG to source Haynesville gas from DTM via Columbia Gulf’s East Lateral Xpress expansion project (ISD early 2025). See East Daley’s Southeast Gulf Supply & Demand Report for more information.
Storage – Traders and analysts expect the Energy Information Administration (EIA) to report an 83 Bcf storage injection for the week ending October 25, according to a survey by The Desk.
An 83 Bcf injection would increase the surplus to the 5-year average by 16 Bcf to 183 Bcf. This would mark the first increase in the 5-year average surplus since the week ending July 5, 2024. The surplus to last year would also increase by 6 Bcf to 112 Bcf.
After big gains last week, natural gas prices reversed course this week with the November ’24 contract falling $0.25/MMBtu (-10%) on Monday (October 28) and settling Tuesday at $2.35. The market is absorbing bearish forecasts showing warm weather from late October extending into the first two weeks of November. Warmer-than-normal temperatures are forecast for much of the US going forward, with only some minor cold showing up in the West in the 6- to 10-day window. Heavy gas consuming regions in Texas, the Southeast, the Midcon and Northeast will be quite balmy for early November, which equates to limited residential and commercial gas demand.
In the latest Macro Supply & Demand Forecast, East Daley expects total US working gas inventory to peak at 3,897 Bcf at the end of October, or 185 Bcf above the five-year average. Our forecast would mark the highest storage inventory since October 2020, when the Henry Hub spot price averaged $2.39/MMBtu.
Rigs –The US rig count decreased by 7 W-o-W to bring the total count to 562 for the October 19 week. Basins losing rigs include the Permian (-4), Marcellus + Utica (-1), Bakken (-1) and Anadarko (-1). The DJ Basin added 1 rig W-o-W.
On the midstream side, Targa Resources (TRGP) is down 6 rigs total with losses on its Midland, Delaware, and Eagle Ford systems. Enterprise Products (EPD) gained 5 rigs total with additions on its Eagle Ford, Delaware and ArkLaTex systems.
East Daley’s weekly Midstream Activity Tracker monitors rig activity by basin and by gathering and processing (G&P) system to better understand midstream impacts. We allocate rigs and monitor flows through 150+ public and privately owned G&P systems in every North American basin. Reach out for more information on the Midstream Activity Tracker.
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