January 26, 2021 Read More →

Analysts see little likelihood any new interstate gas pipelines will be built in U.S.

S&P Global Market Intelligence ($):

Development of major interstate natural gas pipelines in the U.S. may start to wind down as the market turns toward clean energy and as the Biden administration puts its stamp on policies surrounding fossil fuel production and transportation, according to executive observations and analyst comments.

The number and size of new projects on the U.S. interstate natural gas pipeline grid have been on a downward trajectory since 2018, and the grid might not host much significant development activity after the 2-Bcf/d Mountain Valley Pipeline LLC project wraps up.

“It’s going to be difficult to get new projects permitted that are crossing state lines and obviously go to a federal jurisdiction,” Tudor Pickering Holt & Co. Director of Midstream Research Colton Bean said in an interview. “There’s potential for Mountain Valley to cross the finish line, and that opens up a bit of breathing room for the [Appalachian] basin. But in terms of large-scale growth even remotely close to what we’ve seen over the last few years, it’s just not viable.”

Even as the largest U.S. midstream companies have made their case — underscoring the role natural gas will play in a transition to renewable power while committing to net-zero emissions policies — legal and regulatory resistance to new projects could sidetrack much of a 33-Bcf/d buildout in national pipeline capacity predicted in a recent industry study. The study, sponsored by the Interstate Natural Gas Association of America’s research arm INGAA Foundation, predicted increased demand for the gas the pipelines would carry. But the report acknowledged that pipeline projects totaling about 5.3 Bcf/d, and due to come online between 2020 and 2025, have been canceled or delayed since the beginning of last year.

President Joe Biden’s elevation of Federal Energy Regulatory Commission member Richard Glick to chairman will likely change the tone at the agency most responsible for pipeline approval. Glick, who as chairman will get to set the agenda at FERC, has been a dissenting voice on many decisions approving gas pipeline projects. As terms for sitting commissioners expire and as these slots are filled by the Biden administration, Glick’s view that FERC should do more to consider greenhouse gas emissions in its decisions will probably be shared by a majority at the commission. At the last FERC open meeting during the Trump administration on Jan. 19, several contested natural gas orders failed to garner support, including one to help the 303-mile Mountain Valley pipeline that would carry the fuel from West Virginia to Virginia.

The dismal prospects for new pipeline construction are apparent to many of the industry’s biggest players. “I can’t imagine going to my board and saying ‘we want to build a new greenfield pipeline,'” Williams Cos. Inc. President and CEO Alan Armstrong told Bloomberg News in an interview published Jan. 20.

[Gene Laverty]

More ($): Major gas pipe projects face tough road ahead amid regulatory, market challenges

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