With the Mountain Valley Pipeline (MVP) up and running, no company has proposed a new major greenfield egress project for Appalachia.
But more pipeline capacity in the region’s largest natural gas is needed, even if a new pipeline project would face hurdles from active environmental groups in the Northeast U.S. and often fierce local opposition.
However, the driving force behind the next pipeline will be the same force behind the eventually successful fight to build the MVP—commercial viability.
“It starts with demand, and the industry is pretty resilient,” said Greg Floerke, executive vice president and COO of MPLX.
Floerke was a participant on a panel of experts discussing the obstacles facing energy infrastructure at Hart Energy’s DUG Appalachia Conference & Expo on Nov. 7.
The panelists discussed the legislative and permitting difficulties and the constant lawsuits virtually any project, including brownfield expansions, will face going forward.
The MVP began operations in June, after a torturous, decade-long process stymied several times by lawsuits brought by environmentalists and some of the residents along the pathway. The stalled pipeline was only completed after U.S. Sen. Joe Manchin (I-W.V.) insisted a finished project was a condition of his vote for the congressional debt ceiling agreement in 2023.
Lawsuits have continued to target other infrastructure projects in the area, some that are already complete. Williams Cos.’ Regional Energy Access Project, an expansion of a network in the mid-Atlantic states, had its federal permit vacated by the U.S. Appeals Court, D.C. circuit, in July.
A primary problem for the industry is a conflicted government that doesn’t give a clear picture of the legal terrain. Tom Sharp, director of permitting intelligence at Arbo, discussed how midstream companies can navigate the current environment.
“When you have an environment where you have a lot of uncertainty with respect to what's going to happen to any project — not just a midstream pipeline project, it's sort of infrastructure at large — then you have resulted in chilling investment or caused fear of investment in large projects,” Sharp said.
Sharp said a key going forward would be the progress of permitting reform, a legislative project proposed by Manchin and Sen. John Barrasso (R-W.Y.) The goal of the legislation is to speed up the years-long permitting process and modernize the rules governing the agencies that give approval.
Regardless of the rules, the primary mover for a new infrastructure project will be the market for the product it carries, said Amber McCullagh, Rystad’s senior vice president for Onshore North America.
“I actually think the bigger challenge to Appalachian pipeline development is commercial,” McCullagh said.
The supply of natural gas in the U.S. has been historically high for most of 2024, and Henry Hub prices have remained well below $3/MMBtu for most of the year. (Prices on Nov. 11 trended upward, at $2.99/MMBtu mid-day.)
Depressed prices mean potential builders tend to hold on to their money and wait for a better forecast.
“When you're not confident that the commodity will be more than $3, even if your wealth at break-evens are sub-$2, it's very hard to make that worth a 15-year commitment,” McCullagh said.
Over the next two years, analysts have forecast that the price of natural gas will rise, thanks to a growing LNG industry and the demand for power generation for artificial intelligence data centers. Floerke said operators are waiting for the demand to finally arrive.
“So, when people say that the northeast is capped on capacity, my answer is, ‘Well, it depends,’” he said. “It depends on what the pricing is and what's flowing.”