Originally published for customers March 4, 2026.
What’s the issue?
With rising demand, evergreen clauses in transportation contracts may become increasingly important in shaping how and where firm capacity is retained.
Why does it matter?
Evergreen contracts provide predictable revenue to pipelines and reliable capacity for shippers, but can keep unused capacity tied up. How they operate affects when firm capacity actually becomes available.
What’s our view?
Evergreen contracts remain a minority but a significant share of total contracted capacity. While most rollover terms are for one year and usage varies by pipeline, many evergreen contracts have been in place for decades.
With rising demand, evergreen clauses in transportation contracts may become increasingly important in shaping how and where firm capacity is retained. Evergreen contracts provide predictable revenue to pipelines and reliable capacity for shippers, but can keep unused capacity tied up. How they operate affects when firm capacity actually becomes available. Evergreen contracts remain a minority but a significant share of total contracted capacity. While most rollover terms are for one year and usage varies by pipeline, many evergreen contracts have been in place for decades.
The main purpose of evergreen contracts is to protect shippers from abruptly losing capacity they rely on and to provide pipelines with predictable revenue, or sufficient time to replace a shipper reserving significant capacity if transportation service is terminated.
Most agreements begin with a fixed primary term. An evergreen clause automatically extends a firm transportation agreement for a defined rollover term unless one party provides notice of termination during a specified notice window. If neither party provides notice before the notice window closes, the agreement rolls for the full rollover term. Many rollover terms are year-to-year, though longer periods exist. Once the notice window passes without action, both parties remain bound for that entire rollover term. If either the pipeline or the shipper provides timely notice, the evergreen status ends and the capacity becomes subject to an open season.
In many cases, shippers also have a right of first refusal (ROFR), which allows them to retain capacity in the event of a competitive bid. To exercise the ROFR, the shipper generally must match both the rate and the term of the competing bid. FERC has a ROFR written into its regulations (18 C.F.R. 284.221), but it applies only if:
1) the contract term is at least a year; and
2) the shipper is paying the maximum tariff rate.
Pipelines may also include contractual ROFR provisions that extend beyond the regulatory ROFR, including to shorter-term or discounted contracts that would not otherwise qualify. But if the criteria for the regulatory ROFR are met, it cannot be contractually waived.
Approximately 20% of all reported firm transportation agreements in Q1 2026 are currently in their evergreen periods; looking at their term lengths, age, and capacity size helps shape the commercial profile of these agreements:
1. Rollover term length
Current agreements come with different term lengths. Most (approximately 60%) renew on a one-year term, followed by three-year and five-year rollover terms, and a smaller number of contracts that extend seven-ten years. In some cases rollover terms are dictated by the tariff. In others, they are negotiated. For example, one pipeline has nine separate rollover lengths ranging from six months to nine years.
2. Evergreen contract age
How long a contract has been rolling over can be indicative of how reliable a commercial relationship is. Of contracts currently in evergreen status, roughly half expired from their primary term more than ten years ago. The longest-standing evergreen agreement in the dataset has been rolling for more than three decades. This suggests that the presence of evergreen status is indicative of long-standing mutually beneficial commercial relationships.
3. Capacity
Most current evergreen contracts represent a decent amount of contracted transportation volume. The majority exceed 1,000 Dth/d and approximately 25% exceed 6,000 Dth/d. By comparison, the median size of non-evergreen contracts is approximately 6,000 Dth/day.
Taken as a whole, even if most contracts rollover every year, many do so for decades and for significant capacity volumes.
To evaluate longer-term contracting patterns, we examined the top pipelines by rate base using a Q3 snapshot over the past ten years, when systems are typically most fully contracted. We then compared the pipelines with the lowest and highest evergreen capacity shares.
1. Top Pipeline Baseline
Since 2016, the average (both in terms of mean and median) contracted transportation capacity in Q3 has increased by approximately 25% across these pipelines, but there is no consistent year-over-year trend in new contract length. Over the same period, there is no consistent year-over-year trend in new contract length.
Evergreen trends are not uniform across systems. Some pipelines show decreases in evergreen capacity, some remain relatively stable, and some increase. As seen in the chart below, at the aggregate level for this top-pipeline Q3 benchmark set, evergreen share by contract count increased.
2. Bookends: lowest-evergreen vs highest-evergreen systems
To illustrate how contracting structures diverge across systems within the same top-pipeline benchmark set, we compared the pipeline with the lowest evergreen share (approximately 2%), and the pipeline with the highest evergreen share (approximately 40%). In both systems, the number of evergreen contracts decreased significantly and fewer contracts reached an evergreen period. In the most extreme case, the pipeline with the highest evergreen share lost firm commitments when approximately 660,000 Dth/day of evergreen capacity did not renew and only 488,000 Dth/day in new capacity was added in 2017. This could point to shippers feeling less risk of securing capacity on this pipeline.
Browse recent blogs about a similar topic.
Intensity Infrastructure Partners secures firm transportation commitments, advancing Phase I toward a 2029 in-service date — a signal that gas-to-power demand may support multiple pipelines without state underwriting.
Four new proposals aim to fix Section 401 of the Clean Water Act, which has delayed pipeline projects for years through endless withdrawals and resubmittals. Learn how EPA rules and Congressional bills seek to narrow scope, standardize requirements, and end the timing reset loop.