A firm transportation agreement (FTA) is a contract between a natural gas pipeline company and a customer for the transportation of a specific amount of natural gas from one point to another. The agreement guarantees the customer access to transportation capacity on the pipeline, even during times of high demand.

FTAs are often used by natural gas producers, marketers, and distributors to ensure they have the necessary transportation capacity to move their product to market. They are particularly important for companies that rely on natural gas as a fuel source, such as power generators, and for industrial customers who use natural gas as a feedstock for their manufacturing processes.

Under an FTA, the customer is guaranteed a certain amount of transportation capacity on the pipeline, known as firm capacity. This capacity is reserved for the customer and cannot be used by others. The customer pays a fixed fee for the capacity, regardless of whether they use it or not.

FTAs are usually long-term agreements, lasting for several years or even decades. This provides the customer with predictability and stability in their transportation costs, which is important for budgeting and planning purposes.

One of the key benefits of an FTA is that it provides the customer with priority access to transportation capacity. During times of high demand, the pipeline company may allocate capacity on a first-come, first-served basis. However, customers with an FTA are given priority over those without. This ensures that the customer can move their product to market when they need to, even during times of peak demand.

It’s worth noting that an FTA only covers transportation capacity and does not guarantee the price of the natural gas itself. Customers will still need to purchase the gas from a producer or marketer, either through a separate contract or on the open market.

In summary, a firm transportation agreement is a contract between a natural gas pipeline company and a customer that guarantees the customer access to transportation capacity on the pipeline. FTAs provide customers with predictability and stability in their transportation costs, as well as priority access to capacity during times of high demand. They are an important tool for natural gas producers, marketers, and distributors, as well as industrial customers who rely on natural gas as a feedstock.