MVP will rank among the “most valuable pipelines” in the US, Equitrans CEO says

Equitrans Midstream Corp. management remains optimistic about the long-term fundamentals underlying the Mountain Valley Pipeline (MVP), despite the recent postponement of the project’s expected start-up date and increase in its projected costs.

Canonsburg, PA based Equitrans moved the target start date for installed natural gas 2 Bcf/d fueled to early 2024 from late 2023 and project budget increased to $7.2 billion from $6.6 billion. The pipeline would offer much-needed withdrawal from the Appalachian Basin, one of the world’s largest developed sources of natural gas.

“Once operational, the MVP will no doubt be one of the most valuable natural gas pipelines in the U.S., directly connecting our nation’s largest and cheapest sources of natural gas to the rapidly growing demand of markets in the Mid-Atlantic and Southeast.” CEO Thomas Karam said Tuesday after announcing the company’s third-quarter earnings.

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“The revised cost and completion guidelines for the MVP are certainly more than we would prefer,” he added. “However, we must live up to our commitments to implement unprecedented environmental protocols while remaining vigilant to protect the safety of our suppliers and employees, as well as the opposition who continue to violate the right of way.”

Full-year 2023 capital expenditures are expected to total $1.09 billion to $1.14 billion, with $725 million to $745 million allocated to MVP.

“As evidenced by our Q3 results, Equitrans operations continue to deliver on their mission, with our integrated gathering and transmission assets providing the flexibility to support the significant volume growth we experienced this quarter,” said COO Diana Charletta. She is expected to take over as CEO of Karam in January. 1, with Karam moving into the role of executive chairman.

“One element of our strategy over the past several years has been a deliberate focus on strengthening our backbone system to ensure the supply of gas for major offtake pipelines, including the MVP,” Charletta said. “Going forward, we expect several years of mid-digit annual volume growth based primarily on the ownership of direct connections to MVP, with the currently available capacity provided by our gathering and transmission assets and the world-class resource base that we own.”

Accumulated volumes averaged about 8 Bcf/d during the third quarter, up 8% sequentially and 6% year-over-year, Charletta said during the earnings conference call. “This quarter is a good demonstration of our system’s ability to quickly handle a significant increase in production.”

She added: “We have our backbone collection and transmission systems in place operationally and these assets will provide a direct upstream connection to the MVP. Given this dynamic, combined with growing demand in the Southeast, the opportunity to expand MVP capacity by 500 MMcf/d through compression and expected improvements Price TETCO M2 with MVP in operation, we expect annual collection volume to increase in the mid-single digits in the years following MVP in operation.”

During the third quarter, Equitrans also began construction on the Ohio Valley Connector Expansion (OVCX) project. OVCX is to increase the deliverability of the existing Ohio Valley Connector pipeline by approximately 350 MMcf/d “to meet growing demand in key Midcontinent and Gulf Coast markets through existing interconnections with several long-haul pipelines in Clarington, OH,” the line said. he said.

It plans to invest about $160 million in the project, which is primarily supported by a long-term firm capacity commitment of 330 MMcf/d. Equitrans intends to bring the project into operation during the first half of 2024.

Once completed, OVCX would be able to move more than 1.2 Bcf/d of gas to Clarington. The project “can also provide backbone capacity to reach MVP with the same capacity of 1.2 Bcf/d, increasing basin liquidity and providing significant customer choice,” Charletta said.

Equitrans reported net income of $112.8 million (26 cents/share) in the third quarter, compared with a net loss of $520.5 million (minus $1.20) in the same period last year. Operating income was $338.5 million, up from $331.8 million. About 71% of operating revenue came from fixed booking fees, the company said.

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