New Natural Gas Pipeline Capacity at All-Time Low
The least U.S. natural gas pipeline capacity was added in 2022 since the Energy Information Administration (EIA) began keeping records in 1995.
A recent EIA report found that the just 897 million cubic feet (MMcf) per day of interstate capacity was added from five pipeline projects, well below the record of 28,040 MMcf per day added in 2017. Three of the five projects adding interstate capacity were in Florida, and one each was in Louisiana and Wisconsin. No additional interstate pipeline capacity was added from the Appalachian region, in which the abundant Marcellus shale play is located.
Interstate gas transmission pipelines are needed to move the supply of natural gas from the areas where it is produced to other parts of the country that will use the fuel for energy production or export.
“In prior years, interstate pipeline capacity was added from looping and compressor station projects that were designed to accommodate the growing Appalachia production,” the report states. “Since 2017, about 70% of the growth in natural gas production has come from the Permian and Haynesville regions, located near liquefied natural gas (LNG) terminals along the Gulf Coast.”
The report found that the low additions were due to more growth in intrastate capacity, which is not included in the data, and less overall capital expenditure by natural gas companies on interstate pipeline projects.
“Building large-scale, commercial natural gas pipelines that cross state boundaries involves a number of contractual, engineering, regulatory, and financial requirements,” the report states. “These requirements may involve more coordination and may take longer to complete compared with interstate pipelines.”
The difficulty and expense of adding takeaway pipeline capacity has long been a complaint of natural gas companies operating in the Appalachian region. In has become difficult, and often next-to-impossible, to navigate the federal and state regulatory structures and accompanying legal challenges in order to receive the needed permits. Environmental groups that oppose the use of fossil fuels have repeatedly challenged federal and state permits for pipeline projects, adding expense, delays, and uncertainty.
One such example is the Mountain Valley Pipeline, which has faced lengthy delays and increased costs from challenges to key permits that have halted construction of the last few segments of the 303-mile route. A recent opinion from the U.S. Fish and Wildlife Service regarding endangered species is expected to allow federal agencies to again issue permits to allow construction to restart.
The transmission pipeline is being built from West Virginia into Virginia to feed 2 billion cubic feet per day of natural gas from the Marcellus and Utica basins in Appalachia to the southern Atlantic states. The Mountain Valley pipeline is partly owned by Southpointe-based Equitrans, in a joint venture with four other companies. The cost has risen from about $3 billion to $6.6 billion while construction has taken years longer than anticipated due to the permit challenges and it is still not in service.
Permitting reform for pipelines has been a major focus of industry leaders, trade groups, and some legislative leaders. U.S. Sen. Joe Manchin of West Virginia attempted to move a permitting reform bill through Congress last year, but it ran into opposition. Republican Congressional leaders are now working on another piece of legislation that would include permitting reform. In the meantime, natural gas companies are reluctant to take on expensive pipeline projects that may face an uncertain future, even as the Appalachian region sits atop an abundant supply of natural gas that could help meet national and global energy security needs.