As MVP Stalls, Host of Smaller Pipes Forges Ahead

Copyright © 2021 Energy Intelligence Group

Mountain Valley Pipeline (MVP) last week sank a bit deeper in the quicksand that swallowed the Atlantic Coast Pipeline (ACP) in July, but a raft of under-the-radar debottlenecking projects will help boost Appalachia's gas takeaway capacity all the same. MVP project developers are well aware that new snags could prolong the slog that already caused them to push back access to Mountain Valley's 2 billion cubic feet per day of takeaway capacity into the second half of 2021. Yet, Appalachia’s gas producers aren’t being hangdog about it. Several E&P executives noted in recent earnings calls that debottlenecking Appalachia will continue, whatever MVP's fate. "We think Appalachian growth will be enough to cause new constraints within the next three or four years, so outlet pipe is still needed," RBN analyst Rick Smead told Energy Intelligence. According to the Federal Energy Regulatory Commission (FERC), projects sanctioned since 2017 that remain on the commission's docket as of August 2020 totaled 1.6 Bcf/d of planned pipeline capacity -- more than the 1.5 Bcf/d capacity of the now defunct ACP. That tally doesn't include MVP. These takeaway projects in the works aren’t flashy, but they are essential to the basin's future growth. Yet being on the FERC docket doesn't guarantee fruition as it includes two projects almost certainly walking that last green mile to cancelation. Dominion Energy shelved its Sweden Valley project in July 2019 complaining of FERC delays in giving final approval for the 120 million cubic foot per day line from northern Pennsylvania for delivery in Ohio (NGW Jul.22'19). Also doubtful is Equitrans Midstream's Brooke County Access project, which was to deliver 140 MMcf/d of gas to a now canceled power station (NGW Oct.26'20). But some 1.3 Bcf/d in projects sanctioned by FERC since 2017 appear to be soldiering on, including TC Energy's 275 MMcf/d capacity Buckeye XPress Project (BXP) from West Virginia to Ohio, which essentially upgrades compression and replaces 66 miles of 36-inch pipeline on the Columbia Gas Transmission system. TC Energy said on its website that operations were to start late this year, but did not respond to Energy Intelligence requests to confirm its timetable. BXP is large compared to other projects on the list, but all generally share the same under-the-radar advantages: they are brownfield expansion projects with little or no need to lay new pipe. Often the expansion can be accomplished by enhancing compression such as the Tennessee Gas Pipeline East 300 Upgrade in Pennsylvania and New Jersey that adds 115 MMcf/d in capacity by raising compression by 50.6 MMcf/d. The list of projects doesn't include those sanctioned before 2017 but are still fighting regulatory brush fires, such as PennEast Pipeline. That project got FERC approval in 2015 but has been embroiled in legal challenges over the right to use eminent domain to seize state-owned land in New Jersey for the 1 Bcf/d capacity line from northeast Pennsylvania to southern New Jersey. On Jan. 31, PennEast petitioned FERC to sever the 120-mile project into two phases to get it under way while court battles play out (NGW Feb.3'20). The initial 68 miles would be constructed entirely within Pennsylvania, which the company anticipates could start operations by November 2021. The second phase could be completed by 2023 if the US Supreme Court resolves the issues stopping construction in New Jersey. However, Phase 1 still needs approval from the Delaware River Basin Commission, a quasi-federal regulatory body that governs the river systems in Delaware, New Jersey, Pennsylvania and New York. Greenfield Versus Organic Growth “As more capacity is needed out of Appalachia, the distinction between greenfield and organic pipelines is getting very important," Smead said. However, greenfield pipelines "may be infeasible given the ACP and MVP experiences." "Organic growth on existing pipes works much better, for many reasons: among them familiar right of way, synergy with the existing system, etc.," Smead said. "When looping becomes necessary rather than just compression, the pipeline does typically need to seek new right of way parallel to the existing, but it’s in familiar territory with familiar stakeholders." This approach is "far superior to the level of resistance, regulatory delay, and permitting delay that have pushed the cost of greenfield projects to sometimes unsustainable levels,” Smead said. A good example of organic growth is Williams' Leidy South expansion project, which Appalachian E&Ps fully expect to be completed without much delay judging from comments on recent earnings calls. Cabot Oil & Gas is one of three anchor shippers on the 600 MMcf/d capacity line and its CEO, Dan Dinges, called Leidy South the producer's most "near-term project." It does tick the boxes needed to help keep Appalachian production from being capped at around 35 Bcf/d unless a substantial amount of capacity is added to the basin. While the Leidy South expansion project is not yet in the FERC's project queue, Williams' Transco pipeline filed an application with the agency in August 2019, which puts it in position start operations by late 2021. The project would expand Transco’s firm transportation capacity by almost 0.6 Bcf/d from the Leidy Hub and Zick interconnect to Transco’s Zone 5 (southeast) and Zone 6 (northeast) market areas. The project hinges on using existing Transco infrastructure -- the only greenfield elements are two new compressor stations in Pennsylvania. Otherwise, it adds compression at two existing stations, and replaces 6.3 miles of existing pipe and 5.9 miles of new pipeline loop segments along the existing Transco right of way. Dinges said Cabot has "a business development group that is in search of in-basin demand projects that would require incremental infrastructure, but it would not be in the form of the long-haul pipes. ... It is our expectation that we will see in northeast Pennsylvania incremental in-basin demand projects that would create demand off of our tailgate of our gathering system." As for MVP, which will undoubtedly be the last major long-haul pipeline out of Appalachia, the green coalition Appalachian Mountain Advocates has filed a request for a rehearing of the FERC order granting a time extension for the project, as well as for another order partially lifting the stop work order that would allow some construction to proceed. That latter order was also stayed last week by the 4th US Circuit Court of Appeals in Virginia until it rules on green challenges to key water crossing permits. The regulatory and legal ropes MVP opponents have so effectively used to bind MVP from finishing that last 8% of the 303 mile pipeline across the Virginias have added more than two years to the project's timetable and raised its cost by billions of dollars (NGW Nov.9'20). Tom Haywood, Houston

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