Market Insights > Blog

Appalachian Basin Gas Price and Fundamentals

April 16, 2025 | Christian Drolshagen

Updated April 16, 2025

The TETCO M2 basis curve has fallen; the prompt contract has traded lower as winter concludes and the shoulder season begins. Frigid temperatures in January and February led to excess heating demand and production freeze-offs, putting the prompt contract at the highest level in more than two years. Since the start of April 2025, prompt Henry Hub prices have declined by nearly $1/MMbtu, which has helped to support Northeast basis prices and lift them from year-to-date lows.
The TETCO M2 forward curve has been relatively stable over the past few months, Although basis prices have trended slightly lower after reaching a two-year in December 2024. Price action is expected to be driven primarily by weather and regional production changes, with no significant changes to pipeline egress capacity over the next few years. Prices advanced in 2024 as producer curtailments, and the start-up of the Mountain Valley Pipeline led to higher available pipeline capacity. Over the next few years, there will be small increases in egress capacity from pipeline expansions. However, no major long-haul pipes are planned, and given the difficulty in getting MVP finished, they are unlikely. 

 

TETCO M2 Basis Outlook and Notes
Winter '24-'25
Mountain Valley Pipeline is now online
This helped relieve production congestion
Gas production is now at a new all-time high after falling sharply due to producer curtailments earlier in the year
Strong weather-driven demand in January and February supported prices
Summer '25
Production always decreases in summer as local demand falls and pipeline maintenance begins

Cove Point LNG in Maryland goes down for yearly maintenance in October, reducing downstream demand for Appalachian gas

The final months of summer have the most price risk due to mild temperatures and limited pipeline
Winter '25-'26 & Summer '26

Production growth could hit the limits of pipeline egress capacity again, weakening basis differentials

Typically, there is an inverse correlation between Henry Hub prices and Northeast basis; we hold a bullish view on NYMEX prices for this period, potentially weakening M2 and Dom South pricing

Egress capacity is not anticipated to increase by a material amount until 2028

High forward prices starting December 204 likely encourage higher production in Winter '25/'26

AEGIS observed large amounts of hedging from private companies

 

 

For more discussion on basis price moves and the current forward curves:

JUMP TO OUR OUTLOOK AND CHART PACK 
For more discussion and charts, jump to our outlook and chart pack. Remember, the local market is influenced by the broader gas market. Consult our Gas Macro Outlook for more.  

 

Recent Market-Relevant Events 
2.14.2025
Trump offers support for canceled Constitution Pipeline

Read More

 
2.04.2025
MVP Southgate asks FERC to approve changes, including larger diameter pipe

Read More

 
1.27.2025
FERC schedules environmental assessment for Southeast Supply Enhancement

Read More

 

 
Infrastructure Outlook 
The Appalachian Basin has suffered from a lack of pipeline egress capacity in the past several years as pipeline projects were delayed by permitting issues and court proceedings. After multiple years of delays, the Mountain Valley Pipeline finally entered service in 2024 after a Congressional deal. Downstream constraints on the Transcontinental pipeline materialized during MVPs construction, preventing the 2 Bcf/d pipe from flowing at full capacity. Expansions on Transco to resolve these constraints are planned for the next few years. A smaller project, Regional Energy Access, recently entered service (Fall 2024), increasing access to demand centers in the Northeast. 

 

For a discussion of production outlook:

JUMP TO LOCAL SUPPLY 
Below are the most market-relevant infrastructure projects that appear to be funded and going forward. The projects that offer intra-region capacity (egress) are also shown in the chart above.
Note: Deeper discussion included below the map.
 

Major Pipeline Exits From Appalachian Basin

Gas Pipeline Flows
Gas Pipeline Projects

Borealis Pipeline Project

In-service date: TBA
Capacity: 2 Bcf/d

Source: S&P, AEGIS
TGT Borealis Project—On April 1, 2025, Boardwalk Pipelines announced a new Texas Gas Transmission pipeline expansion. The project involves a 2 Bcf/d greenfield line running from existing infrastructure in Lebanon, Ohio, to Clarington in eastern Ohio. No timeline has been given yet, but it's estimated that the line should enter service by the end of the decade. The project should result in higher productive capacity in the Marcellus and Utica.

 

Mountain Valley Pipeline

In-service date: 2Q 2024
Capacity: 2.0 Bcf/d

Source: Equitrans

Mountain Valley Pipeline - MVP began flowing gas in June 2024, with a capacity of up to 2 Bcf/d. The pipeline ships gas from Equitrans' transmission and storage system in Wetzel County, West Virginia to Transco Station 165 in Pittsylvania County, Virginia.

 

Regional Energy Access

In-service date: 4Q 2024
Capacity: 0.83 Bcf/d

Source: Williams

Regional Energy Access - Williams developed the Regional Energy Access project to enhance gas supply in the Northeast region. The project involves increasing compression, which should allow for an additional 829 MMcf/d to be shipped to New Jersey from Pennsylvania on the existing Transco pipeline. Opposition to the project is continuing in court despite the expansion already being placed into service. 

 

Mountain Valley Pipeline Southgate

In-service date: mid-2028
Capacity: 0.55 Bcf/d

Source: Equitrans

Mountain Valley Pipeline Southgate - The MVP Southgate extension initially proposed in 2018, abandoned, and now resurrected is a proposed project to connect MVP to demand centers in the Mid-Atlantic region. The line would extend 75 miles from the MVP terminus in Virginia to delivery points in Rockingham and Alamance Counties, North Carolina. 

 

Other Projects

Transco Expansions - Numerous smaller expansions to the Transcontinental pipeline are planned for the next few years through 2028. While many of these projects are in the Southeast US, they will help alleviate downstream constraints, allowing for additional Appalachian production to flow, especially on the recently started Mountain Valley Pipeline.

 

Local Supply
Production growth should remain limited in the next few years. The Appalachian basin has long been constrained by a lack of pipeline egress, with this likely continuing into the future. As expansions on Transco are completed, Mountain Valley Pipeline can flow at full capacity, with this new capacity likely being filled by production relatively quickly. Output in the region fell sharply in 2024 as low prices forced producer curtailments. Gas production in the area can flex during times of higher demand, such as peak winter months when increased consumption allows for higher pipeline egress, while the yearly Cove Point LNG maintenance often coincides with a drop in production.

 

Production

 

 

Operator Guidance
EQT (Q4 2024 EC)
02/19/2025
2025 Guidance:
CapEx: $2.3B - $2.5B.
2025E Production: Natural Gas: 5.96 - 6.23 Bcf/d (flat YoY).
Q1 2025 Production: Natural Gas: 5.83 - 6.39 Bcf/d.
Drilling & Basin Activity Appalachia: There are no plans to invest in production growth in 2025 due to medium-term headwinds and the fact that capital spending would not result in additional production until mid-2026. Toby Rice mentioned that EQT will only respond with growth if it is sustainable and enough demand is seen on the other side of that production growth.
MVP Southgate project - Shortening the route from 75 miles to 31 miles has helped keep the project going while still delivering the same volume into the North Carolina market. 
Expand (Q4 2024 EC)
02/26/2025
2025 Production Guidance: Total production: 7.1 Bcfe/d 
Drilling & Completion: Running up to 15 rigs in 2025 compared to 16 in 2024
Key Basin Activity: Capital activity is expected to be more constant, building and drawing storage while enhancing efficiencies. 
CNX (Q4 2024 EC)
01/30/2025
Total production: 1.5-1.52 Bcfe/d
2025 Guidance: Optionality to increase volumes or accelerate volumes in the second half of the year in response to market conditions. If prices remain high or move higher, activity will be ramped up.

 
 

 

Rig Count

 

 

Local Demand
 
The Appalachian basin is located in close proximity to Northeast US demand centers, with the Northeast being one of the largest gas-consuming regions in the country during the winter months. Demand in Appalachia specifically reached about 13.5 Bcf/d in February 2025, while the Northeast region as a whole saw consumption hit 29.8 Bcf/d. 
 

 
Other Market Influences

 

Coal-to-Gas Switching: The Northeast US still utilizes a significant amount of coal in its power sector. Among all the US balancing authorities, PJM has the second-largest operating coal fleet, after its neighbor MISO. When gas prices rise, more coal generation can be called up, helping to balance the market.
Coal Retirements: Out of PJM's nearly 40 GW of coal generation capacity, about 7.5 GW is scheduled to retire over the next three years. This should reduce coal-to-gas switching capability and support gas demand. 
Renewables: According to the EIA, PJM plans to install about 16 GW of renewables over the next three years. While the actual generating capacity is likely to be about one-third of the nameplate capacity, the continued expansion of renewables threatens to erode natural gas's market share.
Data Centers and Electrification: The rise of data centers and electrification of oilfield operations (e.g., electric drilling rigs) also adds to power demand. The Northern Virginia region is currently the largest market for data centers, and power demand will likely increase over the next several years. This could support regional power demand and, thus, natural gas prices. 
LNG: The Cove Point LNG export plant in Maryland is the only LNG export facility in the Northeast. The relatively small 0.9 Bcf/d facility typically shuts down for maintenance for about a month every Fall, coinciding with a weakening of Northeast cash prices and a decline in production as pipeline egress capacity tightens due to the drop in demand. 
Environmental Concerns: There is often opposition to pipeline projects and energy infrastructure in the region from Environmental groups. This opposition contributed to the multi-year delay in Mountain Valley Pipeline.

 

 

 
Chart Packet
 

 

 

 

 

 

In this area, there are multiple basis locations affected by similar market conditions. Many AEGIS customers hedge Eastern Gas South Basis, formerly known as Dominion South.

The reader will notice that Eastern Gas South and Tetco M2 have very similar forward curves. AEGIS notes that historically the Tetco pipeline has had many more instances of emergency outages that have caused cash-price discrepancies between M2 and other nearby prices. 

 

 

 

 

Recent Market-Relevant events

 

MVP Southgate asks FERC to approve changes

(February 2, 2025)

  • Market Impact: MVP Southgate should expand market access into the Mid-Atlantic region
  • MVP Southgate is requesting FERC approve changes to the pipeline's route and diameter
  • The new route would be shorter but use a much larger diameter pipe
  • The changes should make it easier for permits and approvals to be secured while also decreasing the construction time
  • The projected in-service date is mid-2028, and due to this, there should not be any immediate price impact
  • While this should result in more bids for Appalachian basis, production may fill the gap quickly

Southgate Link

 

FERC schedules environmental assessment for Southeast Supply Enhancement

(January 27, 2025)

  • Market Impact: The Southeast Supply Enhancement project is a 1.6 Bcf/d Transco expansion which should allow the Mountain Valley Pipeline to flow at full capacity
  • The US Federal Energy Regulatory Commission has scheduled an environmental assessment for Transco’s Southeast Supply Enhancement Project, rather than planning an environmental impact statement, which entails a longer review process
  • The project has a target in-service date of Nov. 1, 2027.
     

Southeast Supply Enhancement Link

 

Trump offers support for canceled Constitution Pipeline

(February 14, 2025)

  • Market impact: The pipeline, which was canceled in 2020, would deliver 650 MMcf/d from the Marcellus to New York State.
  • The project was canceled following significant hurdles relating to permits, with developers saying the risk-adjusted returns no longer supported the project
  • President Trump said the project would reduce energy prices in the Northeast US, one of his campaign goals
  • However, the CEO of Williams said they will not build the pipeline without strong support from states in the region

Source Link

 

Get market insights delivered to your Inbox every day!

Subscribe for Free

Search Insights

Popular Now
First Look - Stronger Dollar Pressures Base Metals
April 30, 2025
First Look - Base Metals Higher as Trade Talks Continue
April 29, 2025
First Look - Aluminum and Copper Start the Week with Modest Gains
April 28, 2025
Base Metals Dashboard - Week Ending April 25, 2025
April 25, 2025

Browse Top Tags
45Z AECO Agriculture Alliance Aluminum Appalachia Bakken Basis BC LCFS Beef Tallow Biodiesel Bloomberg BNN Bloomberg Canada Canadian National Canadian Pacific Kansas City Carbon Chicago Clean Fuel Production Credit Clearbrook CNG Copper Counterparty COVID-19 Crack Spread Crude Oil DAPL Dawn Demand Diesel Distillers Corn Oil Dom South Dominion South E15 Enbridge Environmental EPA ethane Ethanol Feedstock Freight gasoline Grain Gulf of Mexico Haynesville Heavy Crude Hedging Houston Ship Channel HSC Hurricane Import/Export Inflation Reduction Act Infrastructure LCFS LNG Logistics Lumber Macro Macroeconomic market summary Metals MVP Natural Gas NGLs Nickel Northeast Oil & Gas OPEC Options Permian Pipeline Power Production Propane Rail Operators Rail strike Railroad Reference Refined Products Renewable diesel Renewable feedstocks Renewable Fuel Standard Renewable fuels Renewable Natural Gas RFS RIN RIN prices 2024 RINs RNG Rockies SAF Set Rule Soybean Oil Steel Storage Supply Supply Chain Tallow Teamsters Canada Rail TETCO Transportation Trucking UCO Union Used Cooking Oil Waha WCS Weather

Let's continue the conversation

Tell Us More

^