What Is Henry Hub? Definition, Location, Owner, and Connections

The Henry Hub is a critical component in the natural gas market, serving as a distribution hub and pricing point for futures contracts. Its strategic location and extensive pipeline connections make it a nexus for natural gas shippers and marketers, offering them access to various pipelines and markets across the United States. Here's a detailed analysis of the Henry Hub's significance: 1. **Strategic Location and Infrastructure**: The Henry Hub is located in Erath, Louisiana, and is owned by Sabine Pipe Line LLC, a subsidiary of EnLink Midstream Partners LP. Its proximity to several interstate and intrastate pipelines, including the Transcontinental, Acadian, and Sabine pipelines, provides easy access to major gas markets. The hub's connection to storage facilities like Jefferson Island, Acadian, and Sorrento further enhances its logistical advantages. 2. **Pricing Point for Futures Contracts**: As the delivery point for natural gas futures contracts on the New York Mercantile Exchange (NYMEX) and OTC swaps on Intercontinental Exchange (ICE), the Henry Hub is a key pricing point for North American natural gas. Prices are denominated in USD per million British thermal units and are closely watched as a benchmark for the entire North American market. 3. **Market Relevance and Global Impact**: The Henry Hub's pricing is influential not only in North America but also in parts of the global LNG market. Gas producers use the Henry Hub as a reference for natural gas spot pricing due to its high trading volume, clear pricing transparency, and liquidity. 4. **Operational Capacity**: With a transportation capacity of 1.8 billion ft³/d (bcf) (590 m3/s) (20.4 GW) and compressor stations capable of compressing 520,000 decatherm/d (6.3 GW), the Henry Hub is a significant player in the natural gas transportation sector. 5. **Historical Significance and Development**: The Henry Hub was named after the Henry High School, which was named after its benefactor, William Henry. The hub's facilities suffered minimal damage during hurricanes Ike and Rita, which further solidified its importance in the natural gas market. In conclusion, the Henry Hub's role as a distribution hub, pricing point, and connection to multiple pipelines and markets makes it a vital component in the natural gas industry, both in the United States and globally. Its strategic location, operational capacity, and historical development have established it as a benchmark in the natural gas market.