Awaiting new Appalachia takeaway capacity

Monday, 02 July 2018

Anticipating delays to the full start-up of the critical Rover Phase-2 pipeline, analysts cautioned that this growth is likely to be backloaded, with annual growth in H2-2018 forecast to be 4.6 bcf/d.

Imminent start-up of Atlantic Sunrise

The stated ‘mid-2018’ start-up for the 1.7 bcf/d Atlantic Sunrise gas pipeline appeared on track at Williams Q1 18 earnings call in early May, which described the pipe as 70% complete. Williams said weather conditions would be key to exactly when the pipe enters service. On 18 June, Williams/Transco requested to pursue extended hour works—24/7 for 7-10 days—to complete the Pequea Creek crossing in Lancaster County, Pennsylvania. It requested approval of the request by 20 June, so a timely start-up of Atlantic Sunrise seems likely.

In contrast to Atlantic Sunrise, “the project that appears far more unlikely to meet its expected in-service date is Mountain Valley,” Energy Aspects suggested. The project’s 2.0 bcf/d in takeaway is due to come online in Q4 18, yet ongoing legal delays, erosion control problems, and a fierce public protest movement have caused weeks of construction delays that pose a significant risk to its timeliness.

“The potential for delay to either pipe could weigh on later year Appalachia growth figures, which would dampen the 7.3 bcf/d in average annual 2018 y/y uplift from total US production,” analysts cautioned.

Shifting sands

New Appalachia pipelines tend to be initially utilised by flows shifted from other pipes, in combination with some minor organic growth. This was the case in early January when Leach XPress came online between West Virginia and Ohio. Leach saw 1.0 bcf/d in flows in January, its first month of operations. However, deliveries onto the Rockies Express Pipeline originating in Ohio fell by 0.2 bcf/d the same day Leach entered service, and declined by the same amount throughout January. The Texas Eastern pipeline network saw its Ohio deliveries fall by 0.6 bcf/d m/m as Leach came online.

“We estimate that only 0.2 bcf/d in Leach flows were new gas in its first few months of service, proving that the new pipe failed to boost Appalachia output much despite Leach’s 1.5 bcf/d in capacity,” Energy Aspects said in a North America market commentary.