It ain’t easy being a midstreamer lately. Well, it’s probably never been easy, but these days trying to get a pipeline project to the finish line might feel a bit like Sisyphus from Greek mythology, forever pushing a boulder up a hill, filled with obstacles and setbacks. That hill has leaned ever-steeper in the past several years as turnover among FERC’s commissioners delayed project reviews, courts reversed a number of FERC approvals, and public opposition to pipeline projects increasingly delayed progress, even resulting in cancelations. And two weeks ago, the approval process was made tougher still when FERC announced new statements of policy regarding project certifications and greenhouse gas impact assessments. The proposed changes have caused a lot of anxiety among midstream companies, although in many ways FERC just declared as policy what was already happening on a case-by-case basis. But midstreamers shouldn’t panic. In today’s RBN blog, we explain the commission’s new guidance and how much impact it will really have.
We’ve been talking a lot about the plight that midstream companies face these days. We’ve covered the barrage of challenges that killed off high-profile projects like the Atlantic Coast Pipeline and Keystone XL after billions were spent. Most recently, in our NATGAS Appalachia report, we looked at how, despite being 94% complete, the Mountain Valley Pipeline (MVP) may never be finished. Continued court challenges have caused the project’s lead partner, Equitrans Midstream, to call a time-out until it can talk to various agencies and reassess, and co-sponsor NextEra has fully written off the project and given it “a very low probability” of ever being done. Equitrans says it’s still committed to MVP, but our read is that it may be hard-pressed to keep investing in the project for too much longer without some good news. However, things might get worse before they get better. Besides losing three key federal permits, the MVP project is still awaiting an amended certificate from FERC that now may be impacted by the newly announced guidance.
All of this could end up being a real problem for producers trying to access markets and consumers looking for affordable energy. In our Up Around the Bend series, we told how the overwhelming opposition that many midstreamers face in getting new pipelines built could be a serious hindrance to get natural gas supplies to market from two of the U.S.’s most productive regions: the Permian and Appalachia. According to the EIA, interstate gas pipeline capacity additions were lower in 2021 than at any time since 2016, as shown in Figure 1. Last year, a few projects were added out of the Permian, the Northeast, and to serve Gulf Coast LNG demand, but nothing new of any significance came online in the Southeast region, the Pacific region, or the offshore Gulf of Mexico, nor as part of the interconnections to Mexico.
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