The opening of the 1,663-mile Rockies Express Pipeline system, running from natural gas producing basins in Colorado and Wyoming to market in the Midwest and Northeast, will provide many US gas consumers with new access to cheaper gas from the Rocky Mountain region. This development will cause a major reshuffling of US gas transportation patterns by allowing consumers to shift their supply portfolios away from traditional supply areas in the Midcontinent and Gulf Coast to more economic production in the Rockies. This first of two articles examines the background of the REX (Rockies Express) pipeline project and analyzes the effect on US natural gas markets of REX Phases I and II. The concluding article will detail the market reorganization expected to be brought about by the combination of REX Phase III's completion and downstream capacity constraints. Once the entire REX project is complete, its tariff rate structure will provide significant competitive advantage to REX shippers delivering to either Lebanon or Clarington, Ohio, compared to shippers bringing gas from supply areas in East Texas, South Texas, Louisiana, or the Gulf von Mexico. This analysis only compares the variable components of each pipeline's tariff: commodity charge plus fuel loss. The much larger demand component is considered sunk, and must be paid regardless of whether the shipper actually moves any gas. From a market perspective, therefore, decisions about which transportation alternatives influence shipper behavior and market pricing hinge solely on the variable cost.


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    Title :

    US natural gas - 1. Rockies express pipeline to reshuffle gas supply, trade


    Additional title:

    Die Rockies-Express-Erdgaspipeline und die sich daraus ergebenden Änderungen des Marktes und des Angebots


    Contributors:

    Published in:

    Oil and Gas Journal ; 105 , 24 ; 56-63


    Publication date :

    2007


    Size :

    6 Seiten, 8 Bilder



    Type of media :

    Article (Journal)


    Type of material :

    Print


    Language :

    English




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