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Is EQT Back? Jump in Northeast Samples Points to Return

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Leading gas producer EQT appears to be restoring ~1 Bcf/d of production the operator first shuttered back in February. We expect the development to benefit Equitrans Midstream (ETRN), which is working to keep start-up of Mountain Valley Pipeline (MVP) on track out of the Appalachian Basin.

Pipeline samples for G&P systems that serve EQT jumped last week, up ~700 MMcf/d from levels over the last three months after EQT shut-in some production in late February (see figure). Flows remain higher earlier this week on the systems tracked by East Daley Analytics. The timeline would line up with our prediction for EQT to return its gas production in June ‘24, based on the expected start of MVP and higher seasonal demand.

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Flows rose on systems in the Southwest Pennsylvania (SW-PA) region of the Marcellus, the same systems that took a hit when EQT curtailed its production. EDA estimates that the bulk of this lost production has come from ETRN’s Pennsylvania gathering system.

The restart of volumes suggests a price floor over which EQT will run its wells closer to full capacity. Dominion South prices have averaged just above $1.50/MMBtu in May ’24 and DomSouth futures have traded at $1.70 for June ’24. In 2020, EQT also shut down some wells when Appalachian prices fell below $1.50.

The higher volumes coincide with ETRN’s earlier plan to begin flowing gas on MVP by May 22, according to an earlier request filed with the Federal Energy Regulatory Commission (FERC). In April, the pipeline predicted it would be ready to start tariffs by June 1. However, MVP pushed back that timeline last week.

In a supplemental filing with FERC, MVP said that as of May 21, the pipeline is not yet mechanically completed. MVP said 99% of the new pipe has been hydrotested, but the pipeline has 10 welds remaining before the last segment can undergo hydrostatic testing. While MVP had targeted a June 1 start date, the pipeline now plans to start in “early June,” according to the filing. The delay is likely linked to a rupture MVP experienced on May 1 during hydrostatic testing.

The increased supply will likely put some pressure on natural gas prices. Nevertheless, the move makes sense for EQT. The producer is the largest capacity holder on MVP and will realize premium Zone 5 prices on the Transcontinental (Transco) system once the new 2 Bcf/d pipeline begins service. – Alex Gafford Tickers: EQT, ETRN.


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