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Comment: MVP Southgate; the next domino to fall

Published by , Senior Editor
World Pipelines,

Robert Kachmar, Senior Analyst Natural Gas, RBAC Inc., writes: With the ‘on again off again’ nature of Mountain Valley Pipeline’s Status, there was bound to be collateral damage. In our August 2022 commentary “Can Mountain Valley Pipeline Reduce Inflation?” we discussed the background of the project and the benefits it would provide to Virginia customers. These benefits look to be on the horizon after the 4th US Circuit Court of Appeals rejected a challenge to federal approvals on 11 August 2023. Equitrans Midstream projects an in-service date of January 2024 for the oft-maligned pipeline.

Comment: MVP Southgate; the next domino to fall

For collateral damage from Mountain Valley Pipeline, look no further than the MVP Southgate project, a proposed southward extension of the pipeline. Originally intended to ship cheap Marcellus natural gas even further south, the 73.7 mile MVP Southgate project would connect customers in Southern Virginia and North Central Carolina before finally reaching Dominion Energy North Carolina customers.

In our previous article, mentioned above, we used RBAC’s GPCM® Market Simulator for North American Gas & LNG™ software to forecast future Transco Z5 Pricing with and without Mountain Valley Pipeline. We found that, controversially, customers in the region were paying a 33% premium on their natural gas costs without the project. This is the same story for MVP Southgate, which promises to pass along similar cost reductions to an even larger population in Virginia and North Carolina.

These pipelines serve regions historically known for coal production and consumption. In fact, numerous power plants in the region still run on coal. When comparing Coal and Natural Gas’s Carbon Dioxide intensity we find that emissions are reduced by 50% when natural gas is utilised. By facilitating delivery of a reliable fuel source that not only is cheaper, but reduces emissions as well, these pipelines benefit consumers and the environment at the same time.

Only time will tell if MVP Southgate gains traction and gets built like its namesake, but as this region experiences coal to natural gas switching; Appalachian natural gas infrastructure will be of increasing importance. Using GPCMMarket Simulator for North American Gas & LNG software allows users to quantify this importance and make a case that benefits all energy consumers.

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