Last week’s 10-minute fire in northeastern Colorado could have a weeks-long effect on the region’s already low natural-gas prices.
The compression station fire at the Cheyenne Hub on Sept. 16 severely damaged components of a natural-gas pipeline and cut the flow of natural gas in the area in half.
“Anything that negatively affects take-away capacity has a direct and immediate (lowering of) prices,” said John Harpole, chair of the natural-gas transportation and markets committee for the Independent Petroleum Association of Mountain States. “Prices were already at historical lows before the fire, and this has just exacerbated the situation.”
The Rocky Mountain region has historically had a shortage of pipeline capacity, creating a local surplus of natural gas that has kept regional prices lower than national averages.
Last week, natural gas in the region sold for $1.49 per million Btus. The national average price was $6.07.
Before the fire, El Paso Corp.’s Cheyenne Plains pipeline was carrying about 780 million cubic feet of gas per day. The pipeline goes from the Cheyenne Hub to a hub in Greensburg, Kan.
El Paso Corp. didn’t have an estimate on the time frame and cost of repairs, but it said the interruption of gas flow could last through October.
There’s a silver lining for producers: The region’s pipeline capacity is expected to increase by 15 to 20 percent in January when the Rockies Express goes into service.
Staff writer Andy Vuong can be reached at 303-954-1209 or avuong@denverpost.com.
