With the US Mid-Atlantic gas market eagerly awaiting the start-up of Mountain Valley Pipeline (MVP), the long-delayed 303 mile project has hit another wall.
A rupture that took place during hydrostatic testing threatens to upend the in-service timeline of MVP, whose operator, Equitrans Midstream, has asked the Federal Energy Regulatory Commission (FERC) to give approval by May 23 to begin flowing gas on the 2 billion cubic foot per day pipe across parts of Virginia and West Virginia. That would allow MVP "to finalize in-service preparations and project customers to make final preparations for supplies, scheduling and nominations, particularly the project customers whose long-term firm contracts for the full capacity will become effective Jun. 1,” the company said in an April filing.
But on May 1, Equitrans notified federal and state agencies of a rupture and leak near Bent Mountain, Virginia, during final tests to ensure the pipe's integrity. That prompted government officials to join with environmental groups in asking FERC to deny the request — a decision that would have significant market implications this summer.
When MVP begins operating, East Daley Analytics predicts that about 750 million cubic feet per day of its 2 Bcf/d capacity will be utilized until expansions downstream come into service starting in 2027. But even that limited incremental flow would affect price spreads between Appalachian Basin production and demand markets in the US Southeast.
“MVP would marginally benefit [Eastern Gas] South pricing, but its main impact would be to cap upward price pressure at Transco Zone 5, particularly during winter or summer demand spikes,” East Daley said. “The Transco Zone 5 market is short gas during periods of high demand, and MVP will be able to bridge that seasonal gap. As a result, MVP would narrow the spread between [Eastern Gas] South and Transco Zone 5 prices.”
'Still a Lot We Don't Know'
But critics — some of whom have long sought to derail a project that was approved only through a literal act of Congress after five years of delay — are more concerned about safety than any short-term pricing impacts.
Industry watchdog Pipeline Safety Trust (PST) has asked FERC to seek more information about the failure as well as testing that took place elsewhere along the pipeline’s route.
“While it is positive that the inadequacy was identified before the pipeline is filled with product, it is nevertheless concerning given the explosive risk of such a large-diameter, high-pressure gas pipeline,” PST said in a May 10 letter to FERC. “It is too early to tell if this is a sign of a larger problem on the pipeline or an isolated point of weakness. However, [PST] believes that FERC should be on notice about this failure," the group said, urging the commission to make inquiries of Equitrans and the Pipeline and Hazardous Materials Safety Administration (PHMSA) about this test and others.
FERC "should also seek information about the remedial actions taken for this segment and whether MVP has taken care to ensure that similar weaknesses or abnormalities are addressed in a manner that meets PHMSA’s safety standards,” PST said.
The segment along which the rupture occurred “has been sitting in the ground for roughly four years,” said a May 10 report by Washington, DC-based consultancy Arbo, which closely follows US energy regulatory matters. “How long the pipeline has been sitting either exposed to weather or buried without being completed has been the subject of concern for many interested stakeholders, including PHMSA, which issued a notice of proposed safety order on Aug. 11, 2023, citing precisely these concerns — particularly questioning the integrity of the cathodic protection (used to prevent rust) that had been used for the disjointed segments of buried pipeline.”
“There is still a lot we don’t know," Arbo continued. "We don’t know what specific segment ruptured, whether there was any custom welding or fitting at that particular site, whether there were any manufacturing defects in the pipe or the extent of rusting/deteriorating cathodic protection. Therefore, causation speculation and drawing associated conclusions regarding general pipeline safety are premature. The metallurgical analysis will be particularly instructive.”
In a May 7 letter to FERC, a group of 23 Virginia state lawmakers reiterated PHMSA’s concerns about the pipeline’s integrity. “The pipeline has significant percentages of final restoration remaining and has not met necessary requirements of the Oct. 3, 2023, consent agreement with PHMSA). Granting ‘in-service’ status to the project by May 23, 2024 — the deadline suggested by project developers — would be premature and the request should be denied,” the lawmakers said.
“For many, there are concerns and questions remaining about the integrity of pipe left degrading for years in the sun, left in standing water and potentially without cathodic protection,” the letter said.
In a May 13 letter, the Montgomery County, Virginia, Board of Supervisors asked that FERC “not grant official permission to place [MVP] into service until all the safety testing and subsequent remediation has been completed. There is ongoing construction on Poor Mountain in Montgomery County and hydrostatic pressure testing … is incomplete.”
Pipeline Cites 'Misinformation'
But Equitrans argued in a May 10 letter that the concerns raised by officials and environmental groups is “an attempt to derail and delay completion of the project [through] spreading misinformation and unfounded speculation.”
“Opponents have vigorously, albeit erroneously, claimed that the result of this particular hydrostatic test warrants safety concerns; however, this single test result demonstrates the exact opposite conclusion," the company wrote. "In fact, the result of this testing failure, along with Mountain Valley’s transparent reporting and remedial action, demonstrate that process is working as designed and intended." It noted that the hydrostatic testing takes place at “pressure substantially above” the pipeline’s maximum allowable operating pressure.
How quickly FERC moves on Equitrans' request to place the line in service depends on PHMSA, according to Arbo. The consultancy expects the agency “to examine this situation closely, determine the root cause and take whatever corrective action it deems necessary. FERC will follow their lead.”