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More Gas Pipelines Scrapped Than Put In Service In H1 2020

Some 5 billion cubic feet per day (Bcf/d) of new pipeline capacity was placed into service in the United States in the first half this year, but an estimated 8.7 Bcf/d of pipeline projects have been canceled so far in 2020, the U.S. Energy Information Administration (EIA) said on Monday.

The major cancellations included the 1.5 Bcf/d Atlantic Coast Pipeline project, which was designed to transport natural gas from the Marcellus and Utica shale gas plays to electric power consumers in the Southeast.  

Despite a major win on a right-of-way issue at the U.S. Supreme Court in June, the developers of the Atlantic Coast natural gas pipeline said in early July that they were definitely scrapping the project given the ongoing delays and significant cost overruns.

Dominion Energy and Duke Energy said they were canceling the Atlantic Coast Pipeline “due to ongoing delays and increasing cost uncertainty which threaten the economic viability of the project.”

In February, Williams and its partners Duke, Cabot and AltaGas said they had halted investment in the proposed 0.65 Bcf/d Constitution Pipeline project, which would have transported northeastern natural gas production into New England.

“While Constitution did receive positive outcomes in recent court proceedings and permit applications, the underlying risk adjusted return for this greenfield pipeline project has diminished in such a way that further development is no longer supported,” Williams said.

The South Central region in the U.S. saw the most potential added capacity canceled between January and early July—at 3.5 Bcf/d, with the cancellations of the Permian to Katy Pipeline and the Creole Trail Expansion Project 2, the EIA said.

The pipelines that entered into service include the Cheyenne Connector Pipeline and Cheyenne Hub Enhancement Project in Colorado, the Cheniere MIDSHIP Pipeline from SCOOP-STACK Basin in western Oklahoma to the Bennington hub at the Oklahoma-Texas border, and three projects to the Waha hub in West Texas. Most of those projects could increase deliverability to growing natural gas demand markets in North America, the EIA said.

By Charles Kennedy for Oilprice.com

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