Understanding the Henry Hub

As the delivery point for Henry Hub Natural Gas futures, the Henry Hub, located in Erath, Louisiana, is a nexus of several natural gas interconnections.

Here you will find interstate and intrastate pipelines, as well as other related infrastructure. Because of this level of interconnection, Henry Hub offers natural gas shippers and marketers ready access to pipelines serving markets across the entire United States.

The commercial relevance of Henry Hub is the result of its strategic location and logistical infrastructure.

When local markets across the United States price their natural gas, they tend to do so based off a differential to Henry Hub. This differential accounts for regional market conditions, transportation costs and available transmission capacity between locations.

A Closer Look at Henry Hub

Henry Hub is owned and operated by Sabine Pipe Line LLC and its affiliates. They are a full-service header system which offers various receipt and delivery capability, hub management services and an extensive interconnection to one of the most important U.S. pipeline structures.

Through its transportation program, Sabine provides transportation services for both the Henry Hub and Sabine’s mainline. This allows a shipper to transfer gas from one pipeline to another.

The Sabine Pipeline

The Sabine Pipeline is a bidirectional mainline pipeline that stretches from Port Arthur, Texas, to the Henry Hub. It is an interstate pipeline that is certified as an open-access gas transporter, and it is directly connected to four industrial consumers and one producer.

Henry Hub is interconnected to eight pipelines and three intrastate pipelines. These pipelines are part of the highly integrated U.S. transmission grid.


When we look at regional production, we begin to see the importance of this location.

Monthly average natural gas production in Texas has been approximately 637,021 million cubic feet monthly since January 2014. This represents 27% of U.S. marketed production, making Texas the state with the highest natural gas production.

Louisiana produced a monthly average of 155,481 million cubic feet monthly from January 2014 through November 2016. This represents 7% of U.S. marketed production.

Storage Facilities

Henry Hub also has a direct connection to storage facilities, including Jefferson Island, Acadian and Sorrento.

These facilities are salt-dome caverns characterized by high deliverability and high cycling rate, which allow for several withdrawal and injection cycles each year.

As you can see Henry hub is situated in the Southwest region of the United States, which has one of the most developed and extensive pipeline networks in the country.

This allows natural gas to be moved from supply basins and exported to major consumption markets.

Given the physical and logistical attributes of Henry Hub, it is easy to see why this location has become the pricing benchmark for the natural gas market.

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