Appalachian Basin Gas Price and Fundamentals

TETCO M2 Basis Outlook and Notes

2.14.2025

Trump offers support for canceled Constitution Pipeline

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2.04.2025

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

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1.27.2025

FERC schedules environmental assessment for Southeast Supply Enhancement

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Mountain Valley Pipeline

In-service date: 2Q 2024

Capacity: 2.0 Bcf/d

Source: Equitrans

Regional Energy Access

In-service date: 4Q 2024

Capacity: 0.83 Bcf/d

Source: Williams

Mountain Valley Pipeline Southgate

In-service date: mid-2028

Capacity: 0.55 Bcf/d

Source: Equitrans

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.

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.