The total value of U.S. interstate natural gas transportation and storage assets in 2019 saw a smaller increase than previous years as midstream infrastructure caught up to production and as the pipeline sector slowed down on a yearslong buildout.
Contributing to the 2019 growth were a pair of TC Energy Corp. projects that came online in the beginning of the year: Columbia Gas Transmission LLC's Mountaineer XPress gas pipeline and Columbia Gulf Transmission LLC's Gulf XPress project, which combined provide up to 2.7 Bcf/d of incremental transportation capacity between the Northeast and the Gulf Coast.
"While Columbia [Gas] continues to serve downstream LDCs as before, it is also transporting gas for sale in Southern markets served by Columbia Gulf," TC Energy spokeswoman Carol Wirth said in an email. "In addition, there have been substantial increases in power generation load, particularly in New Jersey and Virginia, due to displacement of coal-fired generation by natural gas-fired generation."
Wirth also pointed to growing U.S. liquefied natural gas export capacity as a driver for the Canadian company's 2019 operations, particularly increased gas deliveries to the Leach XPress pipeline and Dominion Energy Inc.'s Cove Point LNG facility in Maryland.
An S&P Global Market Intelligence analysis of data from the Federal Energy Regulatory Commission's Form 2 showed that U.S. gas transmission plant assets went from about $171.5 billion in 2018 to $180.4 billion in 2019, an increase of about 5.21% year over year. That compared to year-over-year growth of 12.1% from 2017 to 2018 and growth of 8.43% from 2016 to 2017. Form 2 collects financial and operational information from major interstate gas pipeline companies under FERC jurisdiction.
U.S. gas storage and processing assets for these companies went from $17.3 billion in 2018 to $18.4 billion in 2019, a modest 6.56% increase compared to the nearly 34.8% increase from 2017 to 2018.
During the second half of 2019, midstream firms' focus began to shift from fast-paced growth to "cash flow harvesting," with many long-haul interstate gas pipeline projects at or near the finish line.
The downward trend in pipeline growth could continue. Companies faced more pressure to adopt conservative financial strategies in the early months of 2020 with low oil prices and the COVID-19 pandemic ravaging demand for fuels. The coronavirus-induced industry downturn coincided with increasing legal and permitting challenges, particularly in the Northeast, which prompted Dominion and Duke Energy Corp. to cancel the 1.5-Bcf/d Atlantic Coast gas pipeline in July and Williams Cos. Inc. to abandon its 650-MMcf/d Constitution gas pipeline in February after each project faced years of delays and ballooning costs. Williams unit Transcontinental Gas Pipe Line Co. LLC also decided to stop pursuing permits for the disputed Northeast Supply Enhancement pipeline project in May.
The nearly completed Equitrans Midstream Corp.-led Mountain Valley Pipeline LLC natural gas transportation project — a proposed 303-mile line between West Virginia and Virginia — and the PennEast Pipeline Co. LLC pipeline project — a proposed 118-mile line between Pennsylvania and New Jersey — are two of the substantial U.S. pipeline projects left. The Mountain Valley developers recently asked FERC for a two-year extension to complete construction.
"There are no real big infrastructure projects that remain in the hopper for any of the companies that we cover," Jefferies & Co. Managing Director Christopher Sighinolfi said in August. "PennEast is one obviously … and that will probably make its way to the Supreme Court around the eminent domain issue."
The biggest decrease in pipeline asset value at an individual company during 2019 took place at Enbridge Inc.'s Gulfstream Natural Gas System LLC. Another Enbridge system, Texas Eastern Transmission LP, saw one of the largest decreases in gas transportation volumes, even though its asset value grew by over $695 million. Enbridge was forced to temporarily shut in some of Texas Eastern's lines following a fatal explosion in central Kentucky in August 2019, the second time that year that a blast interrupted service on the system.
"The decreases in 2019 were the result of pressure reductions implemented on those assets," Enbridge spokesman Michael Barnes said in an email. "The pressure restrictions were implemented in order to undertake integrity assessments. The restrictions were both self-imposed and in order to comply with regulatory requirements."
Rockies Express Pipeline LLC also saw a decrease in transportation volumes in 2019, with that quantity slipping almost 108 million Dth from about 1.6 billion Dth in 2018 to 1.5 Dth in 2019 as recontracting issues dominated investors' and credit rating agencies' concerns. The pipeline, owned by Tallgrass Energy LP and Phillips 66, could see contracted volumes decline further if a bankruptcy court nullifies shipper Ultra Petroleum Corp.'s 200,000-Dth/d firm transportation agreement as part of the driller's Chapter 11 proceedings.
Loews Corp.'s Texas Gas Transmission LLC had the biggest decrease in value for storage and processing assets, falling about $23.2 million from about $285.6 million in 2018 to about $262.3 million in 2019, while Kinder Morgan Inc.'s Southern LNG Co. LLC saw the biggest increase among these assets, rising $446.2 million.
