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A study published Monday by an energy analysis nonprofit suggests that changes in natural gas markets since the Mountain Valley Pipeline was conceived have undercut the economic case for the long-delayed pipeline project.

First announced in 2014, the 42-inch-diameter, 303-mile Mountain Valley Pipeline is slated to provide up to 2 billion cubic feet per day of natural gas from the Marcellus and Utica shale formations to markets in the Mid-Atlantic and Southeastern regions of the United States, traveling from Northwestern West Virginia to Southern Virginia.

But legal and regulatory challenges have set back the pipeline, which originally was scheduled for completion by the end of 2018 but is now slated for service by the end of 2021. Its price tag has ballooned to at least $5.8 billion, over 50% more than its original cost estimate.

Monday’s analysis by the Institute for Energy Economics and Financial Analysis, a nonprofit that supports transitioning to sustainable energy, concludes that lower gas demand and risks to liquefied natural gas exports have lessened the need for the Mountain Valley Pipeline.

In addition to citing the project’s cost overruns and unknown cost effects of the project sponsors’ recent decision to start a new individual water permit application process, the IEEFA report notes that natural gas demand in the Southeast and Mid-Atlantic is projected to be much lower than projections anticipated when pipeline developers sought approval from federal regulators for the project in 2015.

“Pipeline capacity out of the Appalachian Basin exceeds production. Growth in Appalachian natural gas production is increasingly dependent on a growing export market for Appalachian gas, a prospect that faces significant risks. Thus, Mountain Valley Pipeline faces a significant risk that its capacity will be underutilized,” the report argues.

The report also posits that the potential cancellation of the Southgate extension of the pipeline, which would span 75 miles from Southern Virginia into Central North Carolina, weakens the case for the pipeline.

In August, the North Carolina Department of Environmental Quality denied a key water quality permit for MVP Southgate, saying there was no basis for the permit approval unless the main pipeline was built, an outcome that the department concluded might not happen. Litigation in that case is pending.

The IEEFA report criticizes the Federal Energy Regulatory Commission’s process for evaluating pipeline need, arguing that it does not consider a rapidly changing domestic natural gas market or risks associated with growing liquefied natural gas exports on the domestic gas market.

“The vanishing need for the Mountain Valley Pipeline highlights the urgent need for reform of FERC policy and practices,” the report states.

Natalie Cox, spokeswoman of pipeline developer Equitrans Midstream Corp., said in an emailed statement that the IEEFA report’s conclusions are “in alignment with the group’s specific policy agenda, as opposed to being based on facts and data related to the MVP and MVP Southgate projects,” reporting that the main Mountain Valley project retains strong support from shippers whose need has grown since cancellation of the Atlantic Coast Pipeline last summer.

“The need for an abundant, reliable energy supply is real, and the unnecessary project delays are affecting consumers,” Cox said.

Cox pointed to a Feb. 23 announcement from Roanoke Gas Co. stating that it would raise rates to cover increased gas costs stemming from February’s ice storms. The storms affected natural gas supply and market pricing. In the statement, Roanoke Gas President and CEO Paul Nester called the severe weather a “real-time, real-world example of the need for the Mountain Valley Pipeline and the gas it will supply our customers and others throughout the United States.”

“If the MVP had been in service, we believe we would have saved our customers significant commodity gas costs by delivering gas from the prolific and affordable Appalachian Basin,” Nester stated. “[T]he flexibility and supply diversity that MVP would have provided are material. This event has proven how much this region, our state and country need the MVP.”

Cox argued that continued legal challenges by the Sierra Club and other groups have caused substantial delays that are now affecting local consumers.

“Had MVP been in-service as planned, Roanoke Gas Company customers would not be facing these significant cost increases to heat their homes and operate their businesses,” Cox said. “The risk of this happening again will remain until this region has additional gas supply from the MVP.”

One of the IEEFA report’s three authors, Cathy Kunkel, is an energy analyst who ran unsuccessfully as the Democratic Party’s challenger to unseat Rep. Alex Mooney, R-W.Va., in the 2020 2nd Congressional District race.

Reach Mike Tony at, 304-348-1236 or follow

@Mike__Tony on Twitter.

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