MVP completion expected to help unlock potential of West Virginia oil and gas

n Appalachia’s gas industry growth has been hindered by pipeline infrastructure shortages, making MVP crucial for regional expansion.

n Pipeline projects face high costs, regulatory hurdle, and opposition, with MVP’s cost rising to $7.6 billion and developers spending $12 billion on unfinished projects.

CHARLESTON, W.Va. (WV News) — Stakeholders in the oil and gas industry say it’s only a matter of weeks before the long-delayed Mountain Valley Pipeline will be in service.

The pipeline will help address the industry’s long-standing problem of having more than enough product to meet demand, but not having an economically feasible way of getting product to market.

The pipeline is expected to come online “maybe in the next two months,” said Eric Vir, chief financial officer of Pillar Energy, during a recent meeting of the West Virginia Legislature’s Joint Standing Committee on Energy and Manufacturing.

MVP will allow roughly 2 billion cubic feet of gas to be transported from the region per day, Vir said.

“Our gas can get to the Southeast and other regions to improve pricing here and make us more competitive,” he said.

Appalachia initially pulled ahead of other gas-producing regions at the start of the shale gas boom more than a decade ago, but the region’s growth has faltered due to lack of pipeline infrastructure, Vir said.

“We haven’t been able to provide any pipelines to take gas outside of the region, so we’ve been hovering around 35 bcf probably for the past three or four years,” he said.

There are only two liquid natural gas processing facilities on the East Coast that West Virginia producers can reach via the current pipeline infrastructure, said James Crews, vice president of Northeast business development at MarkWest Hydrocarbon.

“Without additional [liquid natural gas] infrastructure, it makes it virtually impossible for us to grow in Appalachia,” he said.

A significant pipeline project backed by Dominion Energy was scrapped in July 2020 after its cost ballooned, Crews said.

“The Atlantic Coast Pipeline ... was canceled by Dominion,” he said. “They took on so much debt that they eventually sold their company to Berkshire Hathaway. I think they wrote down about $5.5 billion, and they didn’t have much more than about 30 miles of pipe in the ground. They never made it.”

MVP’s total price tag has more than doubled since it was first announced in 2014, Crews said.

“I think they started at $3 billion or $3 billion and change,” he said. “They’re up to $7.6 billion to get that pipeline in service.”

Building a pipeline is an incredibly expensive and arduous process. The projects are subject to federal approvals and regulation and often face opposition from activists, Crews said.

“You simply cannot build federally regulated infrastructure between Maine and the Savannah River on the Georgia-South Carolina border,” he said. “It’s constantly held up in court. Time means money, and eventually pipeline and electric transmission infrastructure goes out of business.”

The hope of seeing liquid natural gas processing in the Gulf of Mexico expand has been thrown into limbo by the Biden administration’s recent decision to “temporarily” pause future liquid natural gas export permits, Crews said.

“We’ll see what the meaning of ‘temporary’ is in Washington,” he said.

It’s estimated that more than 700 trillion cubic feet of gas remain untapped in Appalachian, Crews said.

“So a massive amount of gas in the ground,” he said. “The country will eventually need the gas from this basin to flow to [liquid natural gas] export terminals.”

After seeing what’s happened with projects like the Atlantic Coast Pipeline and the Mountain Valley Pipeline, other developers are unlikely to take on another significant East Coast pipeline project anytime soon, Crews said.

“No one in their right mind would try to permit a pipeline to the Eastern Seaboard right now,” he said. “It’s a losing proposition, unless you’re looking to go into bankruptcy.”

Various developers have collectively spent around $12 billion on pipeline projects that have “never carried one dekatherm of natural gas, Crews said.

“The most publicized has been MVP, and it literally took an act of Congress,” he said. “Joe Manchin put it on his back and carried it to completion.”

The Mountain Valley Pipeline project is expected to be completed in “about seven to eight weeks,” Crews said.

Officials with Equitrans Midstream, the developers of the project, have said the project remains on target to be completed “during Q2 of this year.”

The pipeline’s 303-mile route includes Braxton, Doddridge, Fayette, Greenbrier, Harrison, Lewis, Monroe, Nicholas, Summers, Webster and Wetzel counties in West Virginia.