Waiting on the World to Change, Part 3 - TransCanada's Columbia System Set to Boost Gulf-Bound Gas Flows

U.S. Northeast natural gas producers in recent months got a substantial boost in pipeline capacity to receive and move incremental gas production volumes to attractive Gulf Coast markets. TC Energy’s Columbia Gas and Columbia Gulf transmission systems in March completed the Mountaineer Xpress and Gulf Xpress pipeline expansions, respectively, increasing the combined system’s Marcellus/Utica receipt capacity by 2.7 Bcf/d in the producing region, while also bumping up the Marcellus/Utica’s takeaway capacity to the Gulf Coast by nearly 900 MMcf/d. The duo of expansions is among the biggest takeaway capacity additions to be completed out of the Northeast, volume-wise, and among the handful that inextricably connect Marcellus/Utica supply markets to well-sought-after LNG exports markets along the Texas and Louisiana coasts. One of the export terminals these projects are designed to serve is Sempra’s Cameron LNG, where Train 1 began commercial operations in recent weeks. Today, we provide an update on the upstream and downstream implications of the recently installed Northeast-to-Gulf Coast pipeline capacity.

TC Energy’s Columbia Gas and Columbia Gulf natural gas transmission systems’ recent expansions out of the Northeast — the Mountaineer Xpress and Gulf Xpress projects, both completed in March — are responsible for a large portion of the uptick in Marcellus/Utica production in the last few months and they’ve added an incremental 860 MMcf/d of capacity for Appalachian gas supplies moving south to the Gulf Coast. The two projects join a number of other expansions in recent years that have inextricably tied Marcellus/Utica supply markets to attractive demand markets along the Texas and Louisiana coasts. Where is that latest surge of southbound supply ending up? Today, we look at the downstream impacts of the completed projects, namely on Louisiana gas flows and LNG feedgas deliveries.

With recent project completions, Northeast takeaway constraints have eased, and regional supply prices have strengthened. But now the slate of planned pipeline expansions is dwindling. Between late-2015 and the end of 2018, midstreamers will have completed 23 takeaway projects out of Appalachia, totaling nearly 14.5 Bcf/d of capacity. That leaves just a handful of projects with little more than 6 Bcf/d of capacity to come, most of them facing stiff environmental opposition, regulatory turmoil and higher costs. Yet, as Appalachian gas production continues to grow, these projects will be critical to keeping the takeaway constraints and depressing supply pricing from returning, at least for a little longer. More than half of the remaining capacity would come from two competing projects — Dominion Energy’s Atlantic Coast Pipeline (ACP) and EQM Midstream Partners’ Mountain Valley Pipeline (MVP) — both greenfield efforts tied to growing gas-fired power generation demand along the Mid- and South-Atlantic seaboard and both embattled by a barrage of legal challenges. In today’s blog, we provide an update on the Atlantic Coast and Mountain Valley projects, including the latest status and timing.