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Over, Under, Sideways, Down – Energy Transfer’s Gulf Run Pipeline Expands Critical Louisiana LNG Feedgas Corridor

If pipeline-constrained Haynesville Shale producers’ New Year’s resolution was to grow volumes, they just got a big boost: Energy Transfer recently placed in service its new Gulf Run Transmission natural gas pipeline in Louisiana, increasing north-to-south capacity in the state by 1.65 Bcf/d. It’s the first of several pipeline projects due online in 2023 — and among others proposed for subsequent years — that will be critical for debottlenecking the Louisiana pipeline network and connecting Haynesville and other gas production volumes to LNG export projects vying for feedgas supply on the Louisiana coast. U.S. LNG developers are in a race to capitalize on the tight global LNG market and finalize terminal plans, with much of the next wave of liquefaction and export capacity additions planned for the Louisiana coast which may, in time, help alleviate energy security concerns, particularly across the pond in Europe. If these pipeline projects don’t get built on time, the resulting supply shortage in southern Louisiana would not only wreak havoc on Henry Hub and the domestic gas market but would reverberate around the globe. Gulf Run’s in-service is good news for at least one facility: the under-construction Golden Pass LNG, which is the anchor shipper on the pipeline and due to begin commissioning later this year. In today’s blog, we look at what the new capacity could mean for flows and production growth in the short- and long-term.

As we’ve said in recent blogs — (LNG) Will Never Do Without You and Where It’s At — one of the biggest uncertainties — and risks — to the next wave of U.S. LNG export projects is the availability of feedgas supply when and where it will be needed. Energy reliability problems in Europe unleashed demand for North American LNG export projects, and the bulk of those are located along a less-than-100-mile stretch of coastline straddling the Texas-Louisiana border. That, in turn, has spurred activity and growth in the Haynesville Shale in Louisiana. Haynesville output ballooned to record highs and led the overall rebound in Lower 48 gas production in recent months. Looking forward, in RBN’s Mid-case scenario (assuming the current futures curve and no pipeline constraints), the Haynesville would grow by 3.8 Bcf/d over the next three years.

The trouble, as we’ve laid out in our Down by the Water series, is that the pipeline network to move gas from the Haynesville and other basins south to the export supply hubs in southern Louisiana — what RBN calls the Central Corridor — has been running chock-full and, much like in Appalachia, north-to-south flows in the Bayou State are increasingly dependent on pipeline expansions. So, the key to unlocking U.S. LNG export growth will be the pace of pipeline expansions and how well they line up with export capacity additions as they come online. A number of debottlenecking projects have come online in Louisiana over the past two years. But a lot more will be needed, and — it can’t be said enough — timing will be everything.

That’s where Energy Transfer’s Gulf Run comes in. It is the latest project to add north-to-south capacity in Louisiana, and well ahead of Golden Pass in-service. Let’s look at how it fits into the Louisiana pipeline network, what it’s flowing now and what we can expect once Golden Pass comes online.

The project was originally conceived by Enable Midstream Partners before it merged into Energy Transfer (ET), and later modified after the acquisition. The final, approved project had three components: 1) construction of a new 135-mile, 42-inch-diameter, north-to-south gas pipeline; 2) modifying an existing west-to-east pipeline in northern Louisiana — Enable Gas Transmission’s (EGT) 1.9-Bcf/d Line CP — to make it bidirectional; and 3) acquiring Line CP and incorporating it into Gulf Run, albeit with a lease of 445 MMcf/d of the capacity back to EGT to meet the needs of its existing shippers. The original design also included a new 36-mile lateral to the Gillis, LA, area — a key hub for feedgas routes to the Gulf Coast — but that was scrapped in the final application (more on that in a bit).  

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Altogether, the system was designed to flow as much as 1.65 Bcf/d of production directly from the Haynesville — and indirectly from other basins, including the Anadarko, Permian and Marcellus/Utica via ET’s extensive inter- and intrastate pipeline network — down to southeastern Louisiana, including an interconnect with Golden Pass Pipeline (GPP), the feeder pipeline for the Golden Pass terminal currently under construction. Golden Pass, as we noted above, is the anchor shipper on the project and has signed on for 1.1 Bcf/d of firm service on Gulf Run for a 20-year term.

Taking a closer look, the completed Gulf Run system — blue line in Figure 1 — comprises two zones. Zone 1 is essentially the modified Line CP segment and extends from Panola County in North Texas (i.e., the Carthage Hub) to Delhi, LA, located in northeastern Louisiana’s Richland County (i.e., the Perryville Hub, a critical Marcellus-to-Gulf Coast gateway — see Turn the World Around). Zone 2 is the greenfield portion and extends south from an interconnect with Zone 1 at the Westdale compressor station in Red River Parish, LA, to a southern terminus near Starks, LA, in Calcasieu Parish.

Figure 1. Map of Gulf Run Pipeline and Related Infrastructure. Source: RBN

On the western side of Zone 1, the system receives gas at the Carthage Hub from a number of gas processing and gathering meters in the Haynesville, as well as from two EGT interstate interconnects and two intrastate pipelines: ET’s Houston Pipe Line Co. (HPL) and M6 Midstream’s Midcoast Energy East Texas system. (Gulf Run also has delivery interconnects with one of the EGT points and HPL.) Then there are another eight gathering system interconnects on the Louisiana side of Zone 1, spread across the Haynesville, including Bienville, Caddo, De Soto and Red River parishes, as well as an interconnect with Acadian Gas Pipeline in Red River Parish and with Arcadia Gas Storage in Bienville.

From there, the gas can be delivered to the handful of delivery interconnects within the Haynesville itself, head south into Gulf Run’s Zone 2 segment, or move all the way east to Perryville. In the Perryville region, Gulf Run Zone 1 can deliver into Texas Gas Transmission in Ouachita Parish, as well as eight other interstate systems with interconnects in Richland Parish, including: ANR Pipeline, Columbia Gulf Transmission, Gulf South Pipeline, Midcontinent Express, Southeast Supply Header, Tennessee Gas Pipeline, Trunkline, and Perryville Gas Storage. Several of these pipelines are also flowing gas south from Appalachia, and have bidirectional interconnects with Gulf Run, meaning they can also send volumes west on Gulf Run for delivery into Zone 2.

In Zone 2, Gulf Run has no receipt meters and just three delivery points: a frac sand provider and an interconnect with Trunkline (purple triangle and the intersection of the blue and pink lines in Figure 1) in Beauregard Parish, and the interconnect with Golden Pass Pipeline (green triangle at the intersection of the blue and yellow lines) in Calcasieu Parish. Deliveries to GPP will be dependent on feedgas demand at Golden Pass LNG (GPL; yellow diamond). Construction at GPL is well underway, and the terminal is expected to begin commissioning activities in the second half of this year, with the first of three liquefaction trains starting service in 2024, and the subsequent two trains coming online at six-month intervals. GPL, a 70/30 joint venture of QatarEnergy and ExxonMobil, has indicated that it could produce first LNG by the end of 2023, with the first cargo on the water in 2024. Commissioning facilities typically take feedgas for a few months before producing first LNG, so this timeline implies that feedgas deliveries will begin flowing to the terminal later this year.

As for the Trunkline interconnect, Gulf Run said in a July 2022 open season notice that it was seeking interest in accessing additional delivery points along the Louisiana Gulf Coast by securing capacity on Trunkline’s existing Field Zone. Trunkline, like Gulf Run, is owned by Energy Transfer, and by way of its Field Zone, Trunkline has access to the all-important Gillis area we mentioned earlier, which may be one reason the project scrapped the Gillis Lateral after the Energy Transfer acquisition.

With GPL being the primary shipper and not expected to take gas until later this year or early next year, the question is, what can we expect in terms of flows on Gulf Run until then? Well, it’s been just over two weeks since the new system began flowing its first volumes on January 2, so we have an early window into how Gulf Run could shake up flow patterns within Louisiana. Next, we look at receipts and deliveries on the system, using pipeline flow data from Wood Mackenzie.

Since January 2 to date, total receipts on Zone 1 have averaged about 2 Bcf/d, with nearly all of that coming from the western end of Zone 1 and only nominal volumes from Perryville. Figure 2 summarizes the receipts by county/parish. Receipts on the west end have been split almost evenly between Texas and northwestern Louisiana. On the Texas side, Gulf Run received an average of about 800 MMcf/d at Carthage, all of that in Panola County (orange bar segment), and about 54% of the Panola County receipts came from one interconnect: the Gemini Carthage Pipeline gathering system. The bulk of the remaining 1.1 Bcf/d or so came from four main parishes in the Louisiana Haynesville — Bienville (gray bar segment) Caddo (yellow bar segment), De Soto (light green bar segment) and Red River (blue bar segment) — except for the less than 20 MMcf/d that was received at Perryville in Richland Parish (maroon bar segment).

Gulf Run Pipeline Receipts

Figure 2. Gulf Run Pipeline Receipts. Source: Wood Mackenzie pipeline scrapes

As for where the gas is ending up, pipeline flow data shows that the bulk of the deliveries to date have been to other interstate and intrastate pipelines along Zone 1, with an average 1.5 Bcf/d going to storage or interstate connections at or near the Perryville Hub. Of that, a little over 200 MMcf/d is being delivered to Texas Gas Transmission in Ouachita Parish (pink bar segment in Figure 3), while the bulk of it — about 1.3 Bcf/d — is being delivered in Richland Parish (maroon bar segment). From Perryville, the gas has access to southbound capacity via interconnects with ANR Pipeline, Columbia Gulf Transmission (CGT), Gulf South Pipeline, Midcontinent Express, Southeast Supply Header, Tennessee Gas Pipeline and Trunkline.

That leaves little more than 300 MMcf/d on average that is making it down to Zone 2, to as far south as Beauregard Parish, for delivery to an interconnect with Trunkline Gas Co.

Gulf Run Pipeline Deliveries

Figure 3. Gulf Run Pipeline Deliveries. Source: Wood Mackenzie pipeline scrapes

It’s not surprising that flows to Zone 2 are low, given that GPL is the main shipper and the facility is not due online until 2024. However, even without the incremental demand from GPL, Gulf Run provides a new outlet for Haynesville producers constrained by pipeline capacity. It also opens the door for more southbound flows, and we could see those volumes ramp up if Haynesville production grows enough and demand along the Gulf Coast continues to be supportive of incremental volume. The difference is that until the incremental demand from the terminal comes online, Gulf Run flows would likely have to come at the expense of other supplies, including competing with Appalachian gas hitting Perryville. That may not be as much of an issue this time of year, when Northeast demand is high er and southbound flows from Appalachia are typically lower. But with Gulf Run already online and moving a chunk of its receipts to Perryville, the competition for the southern Louisiana market could intensity in the spring and summer months with implications for the Haynesville and Marcellus/Utica basins.

“Over Under Sideways Down” was written by Jeff Beck, Keith Relf, Chris Dreja, Paul Samwell-Smith and Jim McCarty (Yardbirds). It appears as the second song on side one of the Yardbirds’ third studio album, released in the UK as Yardbirds and Roger the Engineer, and in the U.S. as Over Under Sideways Down. Released as a single in the UK in May 1966, and in the U.S. in June 1966, the song went to #13 on the Billboard Hot 100 Singles chart. According to Yardbirds’ drummer Jim McCarty, the song was inspired by Bill Haley and His Comets’ “Rock Around the Clock.” Jeff Beck started jamming on the song’s bassline, and the group were soon working on an arrangement. The song was in need of an intro, and when Beck came up with the signature riff of the song — a sinewy, Eastern-inspired, mind-blower of a lick that only the mind of a guitar master like Beck could come up with — the group knew they had a hit on their hands. Guitar players are still trying to master that riff five decades after it was created. The free-form lyrics about Swinging London sound like they could have been penned by the hipster bebop entertainer Lord Buckley. The original chorus was changed from “Over under sideways down, that’s the best that I have found,” to “Over under sideways down, backwards forward square and round,” to make any innuendo less obvious to radio programmers. Personnel on the record were: Keith Relf (lead vocals), Jeff Beck (lead guitar, bass guitar), Chris Dreja (rhythm guitar, backing vocals), Paul Samwell-Smith (backing vocals), and Jim McCarty (drums, percussion, backing vocals). 

Roger the Engineer (Yardbirds, Over Under Sideways Down) was recorded between April and June 1966 at Advision in London, with production handled by Simon Napier-Bell and Paul Samwell-Smith. Released in the U.S. in July 1966, the album went to #32 on the Billboard Top 200 Albums chart, making it the highest-charting studio album by the band. The album, along with the Yardbirds’ appearance (with Jimmy Page included) in the 1966 Antonioni film, Blow Up, helped catapult the band to the forefront of British psychedelia. One single was released from the LP.

The Yardbirds are an English rock band formed in London in 1963. They started out as a blues band known for their “rave up” instrumental breaks, but broadened their music to include pop, psychedelic, and hard rock. They are famous for starting the careers of the triumvirate of rock guitarists: Eric Clapton, Jeff Beck and Jimmy Page. Under the tutelage of Jeff Beck, they contributed to many electric guitar innovations of the mid- to late ’60s. They have released six studio albums, 12 live albums, 10 compilation albums, two EPs and 16 singles. They were inducted into the Rock and Roll Hall of Fame in 1997. Twenty-four members have passed through the band since its inception. The group still tours with founding member Jim McCarty being the only original member. Keith Relf died in May 1976, and Jeff Beck passed away on January 11, 2023. 

We at RBN are deeply saddened by the recent passing of Jeff Beck. The iconic guitarist left an indelible mark on music with his work in the Yardbirds, the Jeff Beck Group (which helped to launch the careers of members Rod Stewart and Ronnie Wood), and all of his innovative solo works. Our sympathies go out to his family, fans and loved ones.

Read More: Over, Under, Sideways, Down – Energy Transfer’s Gulf Run Pipeline Expands Critical Louisiana LNG Feedgas Corridor

2023-01-17 20:00:00

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