Why does it seem like natural gas prices in the Rockies are usually the lowest in country?
A. The low gas prices in the Rockies versus those realized at Henry Hub are primarily due to the region’s rapid growth in production and limited pipeline take away capacity. Gas production in the Rockies greatly exceeds its gas consumption, so most of its production must be shipped by pipeline to higher consuming regions. This is especially true in the non-winter months, when Rockies’ gas consumption is seasonally low. At times, this growth in production has overwhelmed the pipeline capacity that takes Rockies gas to larger markets to the east and west. It requires several years to obtain regulatory approvals and put into operations additional pipeline capacity. Until additional capacity is created, a regional gas surplus is created and prices remain low relative to other areas. With the completion of the highly efficient Rockies Express Pipeline (“REX”) and the addition of other new pipelines over the next two years, Rockies gas prices may soon be in closer alignment with those in oth
