Marcellus/Utica Pipeline Projects - Coming Now and Later
The FERC projects that will deliver 17 Bcf/day of Marcellus/Utica production to market are in various stages of development. The impact of these projects on basin pricing will depend on how well the producers can match their production growth to the in-service dates of these projects. Some of these projects have in-service dates at the end of this month others may never go into service, and the rest will enter into service over the next several years.
Those trying to anticipate pricing for this winter, those trying to get their production to market, and those investing in the pipelines that are building this capacity need to be aware of how these projects' timelines may be shifting.
Median and High Projections for Marcellus and Utica Pipeline Capacity
Capacity Now
Four projects, each over 1Bcf, are seeking to be in service by the end of this year, with each of them already having requested authority to put at least a portion of the project into service this month.
| Project | Parent Company | Capacity | Original ISD | Status |
|---|---|---|---|---|
| Atlantic Sunrise | Williams | 1.7 Bcf/day | 7/1/2017 | Request filed on September 19 to immediately place entire project into service. |
| Nexus | DTE and Enbridge | 1.5 Bcf/day | 11/1/2017 | Request filed September 17 to place certain facilities into service on September 28. Requested facilities would allow Nexus to flow 966,823 Dth/day. Remainder to be placed into service later this year. |
| WB Xpress | TransCanada | 1.3 Bcf/day | 11/1/2018 | Request filed September 21 to place "Western Facilities" into service by September 24, with remainder to be placed into service later this year. |
| Mountaineer Xpress | TransCanada | 2.7 Bcf/day | 11/1/2018 | Request filed September 18 to place limited facilities into service to continue providing service to existing customers, with remaining facilities to be placed into service later this year. |
The two TransCanada projects have not been as controversial as the other two in this group. The request by Atlantic Sunrise was opposed by a number of parties, including the Sierra Club, which on August 30 asserted that FERC should not allow any of the facilities to be placed into service until its appeals of the Pennsylvania WQC and FERC's own certificate have been resolved by the courts. However, on September 4, the Third Circuit denied the Sierra Club's appeal of the Pennsylvania WQC, and we do not expect that FERC staff will withhold the in-service date until the DC Circuit resolves the Sierra Club's appeal of the FERC certificate.
Atlantic Sunrise emphasized the importance of projects like these in its request. According to Atlantic Sunrise, its project is "needed to increase transportation capacity from the Marcellus production area and reduce basis differentials." That opinion was supported by separate letters filed by six of those shippers.
Capacity Later
In addition to these projects that are nearing completion, there are five major projects that have received FERC approval, two of which have started construction.
| Project | Parent Company | Capacity | Original ISD | Status |
|---|---|---|---|---|
| Mountain Valley | Consortium led by EQT | 2.0 Bcf/day | 12/1/2018 | Under construction, but burdened with litigation delays over permits. See Do Not Pass Go, Do Not Collect...ACP's and MVP's Path to Receive Full Authority to Construct |
| Atlantic Coast | Consortium led by Dominion Energy | 1.5 Bcf/day | 11/1/2018 | Like Mountain Valley, this project is under construction, but burdened with litigation delays. See Do Not Pass Go, Do Not Collect...ACP's and MVP's Path to Receive Full Authority to Construct. |
| PennEast | Consortium led by Enbridge | 1.1 Bcf/day | 11/1/2017 | Needs key permit from the State of New Jersey and is being slowed by pending condemnation actions. |
| Northern Access 2016 | National Fuel Gas Company | 0.5 Bcf/day | 11/1/2017 | Received positive decision from FERC on August 6 holding that New York had waived its right to issue a WQC. Still needs 404 permits from two USACE districts. |
| Constitution | Consortium led by Williams | 0.65 Bcf/day | 3/31/2015 | On September 14, filed an appeal with the DC Circuit challenging FERC's refusal to hold that New York had waived its right to issue a WQC for the project. |
Atlantic Coast Pipeline's litigation problems continued this week when the Fourth Circuit issued a stay of the permits that authorize the project to use 430 acres of land within two national forests. While ACP and MVP fight various struggles in the courts, the remaining three projects all appear to be at risk of never being constructed. PennEast needs to obtain a key permit, essentially a combined Clean Water Act 404/401 permit, from the State of New Jersey. But New Jersey is challenging the FERC certificate in an appeal before the DC Circuit and is also challenging PennEast's right to condemn state-owned lands. These challenges suggest that New Jersey will not soon grant the required permit.
National Fuel can certainly proceed with construction of its Northern Access 2016 project, once it receives the required USACE permits. However, New York has already filed with FERC a request for a rehearing and a stay of its decision. If FERC were to grant National Fuel a notice to proceed with construction, we would expect New York and others to seek a stay from the DC Circuit. Constitution's appeal of FERC's decision is a last gasp effort for a project that has been on the bleeding edge of the WQC issue, and one that we do not see as likely to prevail.
Capacity Much Later or Never
There are two major projects currently undergoing environmental review at FERC, and both are already running behind the original timelines identified by the project sponsors.
| Project | Parent Company | Capacity | Original ISD | Status |
|---|---|---|---|---|
| Adelphia Gateway | New Jersey Resources Corp. | 0.8 Bcf/day | 4/1/2019 | Filed on January 12, 2018, the applicant requested a FERC decision by August 1, 2018. However, FERC has not yet completed its environmental review. Our median estimate for a FERC certificate is January 15, 2019 and our high estimate is September 22, 2019, either of which makes the projected in-service date of April 1, 2019 extremely unlikely. |
| Northeast Supply Enhancement | Williams | 0.4 Bcf/day | 12/1/2019 | Applicant requested a FERC certificate by June 1, 2018, to meet its projected in-service date of December 1, 2019. On September 6, FERC revised the expected date for issuance of the environmental report to January 25, 2019. Even before that revision, the applicant had revised its projected in-service date to December 1, 2020. |
The Northeast Supply Enhancement project, unlike many of the others discussed in this report, is supported entirely by a contract with a local distribution company, which maintains that it needs the additional capacity to meet growing demand in its service territory. Despite this support, the project will require water permits from New York and New Jersey, which have been at the forefront of the strict application of the Clean Water Act to pipeline projects. Both states have dismissed without prejudice the project's initial applications for water quality permits. This required the company to reapply for those permits and each state has preliminarily determined that the revised applications remain incomplete. It is unclear how soon the project will gain approval from both of these states.
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