U.S. Henry Hub Natgas Pipeline Blast Affects 'Minimal' Production

Jamison Cocklin
09/15/2014

Chevron Corp said Monday a blast on a natural gas gathering pipeline into the Henry Hub supply hub in Louisiana on Saturday that killed one worker interrupted "minimal gas production.”

The company said in an email statement that it has rerouted most of the affected production to an alternative gas system. Chevron said workers were performing routine maintenance on a Chevron Midstream Pipeline gas gathering line in offshore Louisiana waters when the accident occurred. Chevron said a suspected platform valve blowout may have been the cause.

Chevron said the unit that operates the line is continuing to depressurize the line offshore to allow a safe repair onshore.

The pipeline platform continues to be shut in. The platform is part of the Henry Hub gas gathering system, which runs from offshore Louisiana to onshore, Chevron said.

The company said a small amount of gas condensate was released into the water but dissipated.

News of the shutdown caused little price reaction over the weekend, but helped cause the front-month October contract to rise about 2 percent to a high of $3.95 per million British thermal units in New York Mercantile Exchange trade earlier Monday.

The October front-month was currently up about six cents, or 1.6 percent, to $3.919.

Gas traders noted the Gulf of Mexico is not as important to the market as it was a decade ago following the destruction of Gulf Coast infrastructure by Hurricanes Katrina and Rita in 2005. In 2004, the federal Gulf of Mexico accounted for about 20 percent of total U.S. gas production

Today, however, only about 3.2 billion cubic feet of gas per day, or 4 percent of U.S. production, comes out of the federal Gulf of Mexico. Much of the gas now comes from shale gas fields like the Marcellus centered in Pennsylvania.