Tucked amid the Biden administration’s cornucopia of climate initiatives was a poison pill: the greenlighting of the Mountain Valley Pipeline (MVP) in Appalachia. When the Fiscal Responsibility Act of 2023 essentially bulldozed the permitting review process for the pipeline, it accelerated a perilous feedback loop: gas extraction in Appalachia driving growth in gas-consuming infrastructure elsewhere, which in turn spurs even more fracking.
Assuming it is completed on its new schedule, by early 2024, MVP will create a 300-mile direct link from Appalachia’s gas fields to the Transco Pipeline system, the largest interstate natural gas pipeline in the US, which moves natural gas to multiple destinations between New York and Texas, as well as to major LNG export terminals like Cove Point in Maryland. That matters because Appalachia’s gas reserves are colossal. In fact, if it were its own country, it would be the third-largest natural gas producer in the world, behind only Russia and the rest of the United States. (It is also likely the largest source of methane emissions in the US.)
So consequential was the pipeline’s forced approval that it seems to have generated a slew of additional expansion projects to move all that gas to market. As analysts at RBN Energy point out, these “will be key to both enabling gas production growth in the Appalachian basin as well as meeting growing gas demand in the premium markets lying on the other side of the constraints.”
In other words, if MVP and the other “midstream” expansion projects are successful, Appalachian gas will continue to feed downstream super-emitting projects, such as gas-fired power plants, LNG exports, and petrochemicals. Most of these were built or proposed over the past decade to take advantage of the abundant fracked gas unlocked by the fracking revolution in the Marcellus and Utica shale gas formations.
Although it is showing signs of leveling off, growth in the region has historically been astonishing, jumping by an average of 36% per year from 2010 to 2019. Nowadays, the three major producing states in Appalachia (Ohio, Pennsylvania, and West Virginia) churn out nearly 34 billion cubic feet of “dry” natural gas each day. Yet the region only consumes about a quarter of what it produces. The remaining 75% is shipped to other regions for a variety of uses. Fracking begets LNG exports, petrochemicals, and gas-fired power. Just so, each of those uses of natural gas creates a demand for more fracking.
All that fracking – and the expansion of industries that use fracked gas – were made possible by a corresponding growth in pipeline takeaway capacity that allows it to reach downstream markets. Pipeline capacity increased by 16.5 billion cubic feet per day (Bcf/d) between 2014 and 2020 alone – equivalent to roughly three times the amount of gas used by the entire state of California or four times as much as New York state— directed primarily to the Midwest, Southeast, and Canada.
The buildout from Appalachia had begun to slow in recent years after several major projects stalled in the face of opposition, including the Atlantic Coast Pipeline and the Constitution Pipeline. Also slowly grinding to a halt was the Mountain Valley Pipeline (MVP) – at least until the Fiscal Responsibility Act revived its prospects so that industry experts now anticipate outbound takeaway capacity from Appalachia to rise to just under 39 Bcf/d by 2027.
Initially designed to move two billion cubic feet of gas per day (with possible expansion later), the resuscitation of MVP has generated considerable enthusiasm from oil and gas companies eager to ship Appalachia’s gas to consumers and industry in other regions. According to RBN Energy, no fewer than seven projects have been revived or newly proposed that would ease bottlenecks and enable more Appalachian gas to flow throughout the Transco pipeline system, especially into the Mid-Atlantic and Southeast US.
Appalachia’s gas plays a big role in the Midwest too. Thanks in part to the availability of pipelines heading west, natural gas has largely replaced coal as the leading fuel source for generating electricity in the heartland and that trend looks set to continue. So far in 2023, 10 natural gas-fired power plants have come online in the US, with another six expected to start up by the end of the year and 20 more in the next two years. Illinois, Michigan, Ohio, and Pennsylvania—states with ready access to Marcellus and Utica gas—account for a combined 43% of the natural gas-fired capacity additions that will come online between 2022 and 2025. (Some of these additions are, however, offset by gas power plant retirements.)
Likewise, the US chemicals industry is banking on the expansion of domestic gas production to ensure a plentiful and relatively affordable supply of gas (and gas liquids) to feed the industry’s planned buildout. Demand for ethane, a natural gas liquid used almost exclusively as a feedstock for making plastics, has seen a dramatic growth over the last decade with much of the growth concentrated in Appalachia where NGL production grew by six-fold from 2010 to 2018. As recently as 2020, the US Department of Energy was actively promoting huge petrochemical buildout plans in Appalachia that would have created considerable new demand in the region. But with the expansion of the ATEX Pipeline to Texas and the Mariner East Pipeline system to an export terminal in eastern Pennsylvania, Appalachia’s NGL production now mostly feeds markets in other regions and countries, especially the US Gulf Coast and Europe.
Still, America’s relationship to natural gas is at an inflection point and the decade-long runaway expansion of production in Appalachia remains vulnerable to opposition. Although gas pipeline takeaway capacity out of the region grew every year from 2014 to 2022 , the rate of increase has slowed, placing an upward limit on the amount of gas that can be moved to consuming areas. Pipeline capacity constraints seem to be impacting the potential growth in Appalachia’s fracking: according to the EIA’s latest figures, the region’s natural gas production remained flat in 2022 compared with 2021 after increasing every year since 2010.
Oil and gas companies are taking note and lobbying to ease the permitting and review process to allow for more “midstream” infrastructure—pipelines and processing and storage facilities and the like—to be built so that they can funnel Appalachia gas to downstream demand. In addition to specific language directing federal agencies to push the Mountain Valley Pipeline project through completion, the recently passed FRA included streamlining provisions for infrastructure permitting, making it much harder for environmental groups to challenge agency actions. In fact, FERC Chairman Willie Phillips even suggested that the FRA will make things easier for pipeline builders.
While 2022 saw one of the tightest gas markets of the last decade, thanks in part to the war in Ukraine and record LNG exports, natural gas prices have already returned to pre-pandemic lows. With no new US export capacity expected to come online this year, domestic demand and storage would need to absorb the surge in production. So, with excess cheap gas on its hands, industry will once again push for new ways to grow demand—whether through exports, hydrogen, power production, agrochemicals, or petrochemicals—along with more pipeline expansions to move the gas to market.
Appalachia could do much to tame both fracking and carbon emissions if it were to stop dragging its heels in shifting power generation away from fossil fuels and toward cleaner (and often cheaper) energy sources. There is also much to be done outside the region, especially blocking the construction of new infrastructure to transport gas from Appalachia to downstream markets.
The stakes are higher than ever. If MVP and the downstream natural gas expansion plans are allowed to proceed, the industry’s slate of proposed new projects would ensure that fossil fuel infrastructure operates for decades into the future, imperiling American climate aspirations as well as the health and safety of communities nearby.