Insight
Is the market reaction to the latest delay of Mountain Valley Pipeline justified?
*Please note that this report only includes an Excel data file if this is indicated in "What's included" below
Report summary
On 25 January, the US Court of Appeals for the Fourth Circuit vacated permits issued by the US Forest Service and the Bureau of Land Management that allowed Mountain Valley Pipeline (MVP) to cross the Jefferson National Forest in Virginia and West Virginia. On 3 February, the federal appeals court invalidated biological opinion from the US Fish and Wildlife Service, concluding that an endangered species study was inadequate. Even though MVP started development in 2015 and had completed construction of all compressor stations with 94% of pipeline tranches laid in ground, a long regulatory road with many risks still lies ahead for MVP. While we had assumed MVP would start in-service in October 2022, the latest permit loss will undoubtedly delay MVP even further and inflate the final costs. Read our take on how MVP’s in-service timing will impact northeast regional production, gas flow and prices
Table of contents
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Executive Summary
- Pipeline permitting: a long regulatory journey with many risks
- Supply: northeast producers have shown restraints on growth in the near-term
- Gas flow: MVP cannibalizes existing flows initially and the delay could impact Eastern South Point and Transco Zone 5
- The future: when could pipeline constraints emerge without MVP?
Tables and charts
This report includes the following images and tables:
- Proposed route for MVP
- Regulatory permits and challenges for MVP
- Most producers have slowed down SWMU growth
- Near-term SWMU production outlook versus pipeline takeaway capacity
- Eastern South Point basis changes assuming a no pipe-scenario
- Eastern South Point basis forward changes post-MVP delay announcement*
- Near-term SWMU production outlook versus pipeline takeaway capacity
What's included
This report contains:
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