Henry Hub in Erath, Louisiana, is the central pipeline nexus for the natural gas market in the United States and serves as the official delivery point for New York Mercantile Exchange (NYMEX) natural gas futures contracts. It is a critical infrastructure component, offering a standard price reference for natural gas in North America.
What Is Henry Hub?
Henry Hub is a natural gas pipeline terminal which plays a pivotal role in the U.S. energy markets. Located in Erath, Louisiana, it acts as the primary pricing point for natural gas futures traded on NYMEX. This pipeline hub is owned and operated by Sabine Pipe Line LLC, which is a subsidiary of Enterprise Products Partners L.P.
Geographic Location
Henry Hub is strategically positioned in Vermilion Parish, near the Gulf of Mexico. Its location facilitates significant connections with key production areas and extensive distribution networks across the U.S., making it a spine of the natural gas pipeline system.
Ownership Details
The hub is owned by Sabine Pipe Line LLC, a subsidiary of Enterprise Products Partners L.P., a prominent player in the midstream energy services sector. This ownership ensures professional and efficient management of the facilities.
Market Connections and Influences
Henry Hub connects several major interstate and intrastate pipelines, providing diverse supply routes for natural gas. These connections are instrumental in stabilizing the supply chain and balancing the market.
Key Pipelines Connected to Henry Hub
- ANR Pipeline
- Columbia Gulf Transmission Company
- Natural Gas Pipeline Company of America
- Southern Natural Gas Company
- Texas Eastern Transmission Corporation
- Transcontinental Gas Pipe Line Corporation
Historical Context
Henry Hub has been a cornerstone of the natural gas market since futures trading commenced on NYMEX in April 1990. Its establishment marked a significant evolution in how natural gas markets operate, bringing greater transparency and efficiency in pricing.
Applicability in the Energy Markets
The pricing data derived from transactions at Henry Hub are utilized globally to benchmark natural gas prices. This centrality in pricing has a profound impact on energy trading and pricing strategies worldwide.
Comparisons with Other Hubs
Henry Hub is often compared to other global benchmarks like the UK’s National Balancing Point (NBP) and the Dutch Title Transfer Facility (TTF). Its prominence in the North American market is unrivaled due to its critical infrastructure role and extensive pipeline interconnections.
FAQs
Q: Why is Henry Hub important in the natural gas market? A: Henry Hub serves as the primary reference point for natural gas pricing in North America, influencing market stability and price transparency.
Q: Who owns Henry Hub? A: Sabine Pipe Line LLC, a subsidiary of Enterprise Products Partners L.P., owns and operates Henry Hub.
Q: How does Henry Hub connect to other pipelines? A: Henry Hub connects to several major interstate and intrastate pipelines, providing a comprehensive network for natural gas distribution.
References
- Enterprise Products Partners L.P. official website
- New York Mercantile Exchange (NYMEX) documentation
- Historical data on natural gas futures trading
Summary
Henry Hub is a vital infrastructure asset in the natural gas market, supporting efficient price discovery, market stability, and extensive distribution networks across North America. Understanding its operations and market connections is key for stakeholders in energy trading and pricing strategies.
By providing comprehensive insights into its functionality and importance, this entry underscores Henry Hub’s indispensable role in the energy markets.
