Contortion Nation

[...] Just days before the event at the White House, US domestic natural gas producers were dealt yet another senseless gut punch when a three-judge panel of the United States Court of Appeals for the Fourth Circuit revoked two federally approved permits to complete the critically important Mountain Valley Pipeline project, which is already 94% constructed. Here’s how RBN Energy reported on the developments:

“For those holding onto a glimmer of hope that the long-delayed Mountain Valley Pipeline (MVP) — a big and important greenfield Appalachia natural gas takeaway project — would finally come to fruition this year, it’s safe to say those dreams were shattered last week. On January 25, the U.S. Court of Appeals for the Fourth Circuit vacated federal permits from the U.S. Forest Service and Bureau of Land Management that were needed to complete a 3.5-mile stretch of the mainline through the Jefferson National Forest along the West Virginia-Virginia border. The ruling said the permit approvals were premature — issued before the Federal Energy Regulatory Commission’s (FERC) environmental assessment — and failed to comply with the Forest Service’s 2012 Planning rule. The decision effectively sends the project back into the review process for the second time since construction began in 2018.”

The immediate consequences of the ruling are as follows. First, incremental natural gas produced in Appalachia will be stranded there, driving down prices in that region while increasing prices for the rest of the US market, which was counting on ready access to Appalachian production to meet their future needs. Second, the decision will limit the ability of US LNG export terminals to meet global natural gas demand, further eroding our geopolitical power and emboldening our adversaries – forcing us to make unseemly alliances with despots like the Emir of Qatar. Finally, the decision will make it even harder to attract much-needed capital for future domestic energy development projects. The Mountain Valley Pipeline project received its Certificate of Convenience and Necessity from the Federal Energy Regulatory Commission on October 13, 2017 and construction began months thereafter. That it is still in political limbo more than five years later sends a loud and clear message to energy investors: look elsewhere to deploy capital. Here’s another quote from an earlier piece by RBN Energy which foreshadowed the consequences of the latest events:

“It’s no secret to anybody paying attention to U.S. natural gas markets that Appalachia has long been bedeviled by midstream constraints, often leading to deep gas price discounts. There have been brief respites when new capacity has come online, allowing more gas to flow out, but if you've been reading our blogs and natural gas reports lately, you know we've been sounding the alarm about the growing specter of constraints reemerging. Across the country, the boom in pipeline reversals, greenfield projects, and pipeline expansions that characterized much of the 2010s is pretty much over, with just a couple of approved expansions left, and it’s gotten much harder for projects offering additional capacity to gain traction, especially in the Northeast.”

We wish we could close this piece on an uplifting note but are instead exhausted from unfurling the contortions of our political establishment. What’s clear is that we are an unserious people in a do loop of unproductive contradictions rapidly hurling towards parts unknown. (read more)