Equities
Manchin-Supported Pipeline Aims for June Start, Gas at $2.906/BTU
Manchin-backed 300-mile gas pipeline seeks FERC approval by June 11 amid fluctuating natural gas prices.
Key Takeaway
- Mountain Valley Pipeline, backed by Senator Joe Manchin, seeks FERC approval to start operations by June 11.
- Natural gas futures fell 0.4% to $2.906 per million BTUs; pipeline completion could impact supply and prices.
- US oil output may decline by 1 million barrels/day by late 2025 without increased rig counts; current crude prices at $77/barrel.
Mountain Valley Pipeline Seeks Approval
The Mountain Valley Pipeline, a project that has faced significant delays and opposition, is now seeking regulatory approval to commence operations. The pipeline, which has garnered support from West Virginia Senator Joe Manchin, has requested the Federal Energy Regulatory Commission (FERC) to grant its authorization by June 11. The pipeline is owned by Equitrans Midstream Corp., which is currently in the process of being acquired by US natural gas producer EQT Corp.
The 300-mile (483-kilometer) natural gas line extends from West Virginia to southern Virginia. Initially, the project was scheduled to be completed years ago but encountered numerous legal challenges and opposition from environmental groups. Senator Manchin, who has transitioned from being a Democrat to an independent, has consistently advocated for the pipeline, arguing that it is essential for boosting domestic energy production and reducing energy costs.
Market Impact and Price Movements
The announcement of the Mountain Valley Pipeline's request for operational approval comes at a time when natural gas prices are experiencing fluctuations. On Monday, gas futures for July delivery fell by 1.2 cents, or 0.4%, to $2.906 per million British thermal units in New York. The completion and potential operation of the pipeline could have implications for natural gas supply and prices in the region.
The pipeline's progress and its potential impact on the market are being closely monitored by investors and industry stakeholders. The completion of the pipeline could enhance the transportation of natural gas from production areas to markets, potentially influencing supply dynamics and pricing.
US Oil Production Concerns
In a related development, concerns are being raised about the future of US oil production. According to Adam Rich, deputy chief investment officer at Vaughan Nelson, US oil output is projected to decline by about 1 million barrels per day by the second half of 2025 unless there is an increase in rig counts. Vaughan Nelson, a Houston-based investment manager, oversees $16.4 billion in assets and is affiliated with Natixis Investment Managers.
Rich emphasized the need for more rigs to counteract the declining productivity of existing wells. "We could probably keep the 12-13 million barrel-per-day level for six to nine more months, but if we don’t see rig counts really start moving up here, that’s going to be a big problem," he stated. The number of active US rigs has dropped to its lowest level since January 2022, amid industry consolidation and a shift towards moderate growth and shareholder returns.
Rich also noted that oil prices would need to approach $90 per barrel to incentivize an increase in rig counts. As of Monday, US crude oil futures were trading around $77 per barrel.
