October 30, 2019
Once a quarter, all pipelines are required to file a report that lists their firm contracts for the coming quarter. The most recent of these reports was filed earlier this month for the fourth quarter of 2019. In addition to listing the customer that holds the capacity, these filings indicate whether the customer has assigned the contract to an asset manager.
Today we look at this quarter’s filings across the industry to determine whether there have been any significant changes in the capacities being managed for those customers that hold at least 1 Bcf of daily capacity across all pipelines. As we detail below, the big moves, as compared to the fourth quarter of 2018, is that Antero Resources, Washington Gas Light (WGL) and Range Resources have greatly increased the capacity that they have assigned to these asset managers. We also look at who the big winners were among asset managers that are managing at least 1 Bcf of daily capacity across all pipelines. The winners of this new business include Dominion Energy Fields Services, Vega Energy Partners, EDF Trading, Mobius Risk Group and Tenaska Marketing Ventures.
Major Players That Use Asset Managers
In the most recent quarter, there were over 5,000 individual contracts for which the owner of the capacity had hired an asset manager to manage the capacity. The total pipeline capacity across the industry being managed totaled more than 90 Bcf/day. We are concentrating our review on the asset managers and capacity owners that manage or hold, respectively, at least 1 Bcf of daily capacity. The sixteen shippers with at least 1 Bcf/day of capacity under management represent more than one-fourth of the total under management. This list of major players has not changed a lot, as compared to the fourth quarter of 2018, but there have been some significant changes.
As can be seen in the graphic above, three shippers greatly increased the capacity that they have allowed others to manage for them: Antero Resources, WGL, and Range Resources. Range Resources and WGL basically doubled their capacity and Antero quadrupled its capacity.
Major Asset Managers That Benefited From Increases Since Fourth Quarter of 2018
The list of asset managers that had at least 1 Bcf/day of capacity under their sole management in the fourth quarter of 2019 was similar to the same list in 2018. However, as seen below, there were a number of companies, including Tenaska Marketing Ventures, Vega Energy Partners, Dominion Energy Field Services, BP Energy Company, Columbia Gas of Ohio, EDF Trading North America, Mobius Risk Group, Koch Energy Services, Eco-Energy and South Jersey Resources Group, that had substantial increases in the capacity they are managing.
Looking at what drove the increases between 2018 and 2019 shows how different business models and market conditions can drive these changes. For instance, Xcel Energy and Columbia Gas of Ohio manage the capacity of their affiliates but are otherwise not in the commercial management business. South Jersey Resources also primarily manages its affiliates’ contracts but does some commercial work as well.
Vega Energy Partners landed a whale of a customer in WGL and its affiliate WGL Midstream, which accounts for the entire increase in capacity under its sole management between 2018 and 2019. Conversely, BP Energy has so many customers it is not easy to attribute its increase to a single contract, but it did sign NStar Gas Company as a customer, which resulted in a substantial increase in its managed portfolio.
Dominion Energy Field Services went from nothing in 2018 to over 2.5 Bcf/day under its sole management by signing management agreements with Antero and Range Resources. Most of the increase for Tenaska Marketing and Eco-Energy came from signing on to manage capacity for Antero as well. Koch Energy Services, Mobius Risk Group and EDF Trading increased their contract base under management, mainly by signing significant agreements with one customer, Encana Marketing (USA), Flywheel Energy Marketing and JERA Energy America, respectively.
As can be seen from this discussion, the signing of a significant new contract with a major shipper such as WGL or Antero can have a tremendous impact on an asset manager’s portfolio. The risk associated with such a decision for both the shipper and the manager can vary depending on whether the shipper assigns all of its managed capacity to a single manager, as WGL did with Vega, or whether it spreads that capacity among multiple managers, as Antero did.
If you would like more information on a particular shipper or asset manager, please give us a call.