Weak Economy And Energy Price Uncertainty Continue To Hamper Product Consumption

November 2009 Vol. 236 No. 11

Rita Tubb, Managing Editor

Pipeline & Gas Journal’s 2009 29th Annual 500 Report provides detailed statistical listings of the nation’s energy pipeline systems. As in past years, the report ranks the nation’s top gas distribution, liquids and gas transmission systems.

Gas distribution companies are ranked by number of customers. Transmission companies are ranked according to total miles of pipe while the rank of each liquids pipeline company is determined by yearly crude deliveries.

Additional statistical data compiled for the report are based on operating revenue, net income, total throughput of natural gas, barrels of crude and refined products delivered, miles of mains and service lines and additions to plant. More than 95% of the information is based on calendar year 2008, compiled through forms filled out by each company listed or data collected at the Federal Energy Regulatory Commission (FERC).

While extensive efforts have been made to obtain the latest statistical information available, some companies are no longer required to provide statistical data to the FERC and failed to respond to our inquiries. As a result, we are using the latest information available to us. If your company’s information is incorrectly listed, let us know. We also need to know about any changes of address, contact information, mergers and acquisitions.

Energy Outlook
According to the Energy Information Administration’s Short Term Energy and Winter Fuels Outlook released Oct. 6, 2009, energy prices remain volatile, reflecting uncertainty, or risk, in the market.

The report says the Henry Hub spot price averaged $3.06 per Mcf in September, $0.17 per Mcf below the average spot price in August. Spot prices fell early in September then moved higher as pipeline maintenance reduced available supply and natural gas-fired electric generators increased demand.

The Outlook notes that prices are expected to remain low through October before rising as space-heating demand picks up and economic conditions improve. Prices are expected to increase in 2010 but, even with a projected winter storage withdrawal greater than the five-year average, end-of-March inventories will be the highest recorded since March 1991. Lower breakeven costs for domestic production and growing global LNG supply should limit sustained price increases throughout the forecast period. EIA expects the Henry Hub spot price to average $3.85 per Mcf in 2009 and $5.02 per Mcf in 2010.

On total natural gas consumption, the report indicates that EIA anticipates consumption to decline by 2.0% in 2009 and 0.2% in 2010 as weak economic conditions hamper the industrial sector, where the most recent data show gas usage is down by 12.4% through July compared with the same period last year. With lower consumption in the residential and commercial sectors as well, natural gas use in the electric power sector remains the only demand outlet for increased natural gas supplies.

In its crude oil outlook, the EIA notes the long-term decline in total U.S. crude production has slowed over the past few years, as higher world oil prices have spurred drilling. In the projections, total U.S. domestic crude oil production, which has been falling for many years, begins to increase in 2009. Most of the near-term increase is from the deepwater offshore. Growth is limited after 2010, however, because newer discoveries are smaller, and capital expenditures rise as development moves into deeper waters.

The report states that a number of deepwater discoveries in the Gulf of Mexico have begun to ramp up production recently or are expected to begin production shortly. The largest include Shenzi, Atlantis, Blind Faith, and Thunder Horse.
In its forecast of total consumption of liquid fuels and other petroleum product, the EIA sees this decreasing by about 730,000 bpd (3.7%) in 2009 compared with 2008. During the first half of the year, consumption declined by almost 1.25 MMbpd (6.3%) from the same period last year, one of the steepest declines on record. The year-over-year projected decline in petroleum consumption slows to 210,000 bpd (1.1%) in the second half of 2009 as economic recovery begins to take hold. Monthly average motor gasoline consumption since June has shown year-over-year increases for the first time since September 2007 and continues to grow over year-ago levels throughout the forecast. The modest economic recovery projected for 2010 contributes to a 320,000 bpd (1.7%) increase in total liquid fuels consumption, led by an increase of 110,000 bpd (3.0%) in distillate consumption.

2009 Results
Distribution’s Top Ten. Little change has been seen in the distribution rankings over the past year. The top three companies in terms of gas customers are again Southern California Gas, Pacific Gas & Electric and CenterPoint Energy. The fourth position is claimed by National Grid with 3,464,266, reflecting its acquisition of Keyspan Energy Delivery. Atmos Energy, which added 43,354 customers since our last report, moved from the fourth to fifth position, while the sixth through tenth-positions are once again AGL Resources, Nicor Gas, Oneok, Xcel Energy and Southwest Gas.

Liquids’ Top Ten. The top three companies in terms of barrels of product deliveries by liquids companies remained basically unchanged over the past year, with Colonial Pipeline, SFPP and Magellan Pipeline claiming the top three spots. Buckeye Pipeline moved from the sixth to fourth position, reporting 317,337, while Marathon Pipe Line claimed the fifth spot at 309,508. Mid-America Pipeline managed to move from seventh to sixth position this year, reporting 306,259. The seventh-through-tenth spots were claimed by ExxonMobil Pipeline, 300,705, ConocoPhillips, 239,592, Sunoco Pipeline, 219,049 and Plantation Pipe Line, 175,804.

Transmission’s Top Ten. Over the past year very little change was seen in the top 10 companies in terms of gas throughput. While the gas throughput figures changed, the first through eighth place rankings have been claimed by the same companies. The new rankings saw El Paso report 6,351,675 Dth* to claim the first spot followed by Columbia Gulf Transmission with 4,616,336, Columbia Gas Transmission at 4,486,490, Transcontinental Gas Pipe Line 3,187,983, ANR Pipeline 2,469,420, Natural Gas Pipeline Company of America, 2,419,818 Texas Gas Transmission, 2,349,344, and Tennessee Gas Pipeline 2,108,523. This year’s ninth position went to Gulf South Pipeline that moved 1,736,501, while CenterPoint Gas Transmission claimed the tenth spot with 1,643,289.

*Transmission production figures that appear in the report are reflected in dekatherms.

CORRECTION
Ameren, the parent company of AmerenCILCO, AmerenCIPS, AmerenIP and AmerenUE was incorrectly identified in the print version of the 2009 500 Report as “Ameren IP” instead of “Ameren”.


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