As associated natural gas production in oil-rich basins in the US Mountain West continues to decline in May, eastbound flows to the Midwest on Rockies Express Pipeline dipped as the price spread between the Colorado Interstate Gas and Chicago city-gate hubs continued to tighten. Eastbound takeaway capacity from the Rockies to the Midwest so far in May has been heavily underutilized compared with the year-ago period, according to data from S&P Global Platts Analytics. And lower Rockies production and tighter spreads between CIG and Chicago citygate pricing should continue to influence weak flows into June. Eastbound flows along REX have averaged 690 MMcf/d so far this May, according to Platts Analytics. That average is 890 MMcf/d, or 56%, below year-ago flows. In addition to several REX Zone 1 to Zone 3 firm transportation contracts expiring in 2019 and remaining largely unsubscribed, weakening production and narrowing spreads to the Midwest are likely behind underutilization of the line. In the past 10 days, combined production out of the Denver- Julesburg and Powder River basins has averaged 2.6 Bcf/d, about 400 MMcf/d lower year on year, with year to-date lows recorded in each basin during this span, according to Platts Analytics.
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