Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • youtube2

Vista Projects
Copper Tip Energy Services
Vista Projects
Copper Tip Energy

Troubled $4.6 Billion Pipe Hits New Snag on Surprise Ruling

These translations are done via Google Translate
Oct 3, 2018, by Rachel Adams-Heard

A $4.6 billion shale gas pipeline that’s already been delayed by about a year is facing yet another setback after a court unexpectedly vacated a key permit.

A U.S. appeals court voided a federal authorization for the Mountain Valley project, which will be operated by EQT Midstream Partners LP and is designed to carry natural gas from the Marcellus basin in Appalachia — America’s biggest reservoir of the fuel — to Southeast markets.

Other eastern U.S. projects, including Dominion Energy Inc.’s Atlantic Coast pipeline, have faced similar woes. The conduits would join several built in the region over the past few years as Marcellus drillers seek outlets for abundant shale supply.

In the case of Mountain Valley, the court sided with environmental groups in a ruling Tuesday, saying the Army Corps of Engineers isn’t allowed to substitute a construction method for the pipeline to get around West Virginia’s requirement that work at stream crossings be completed in 72 hours.

The decision is “a huge blow to the project,” said Brandon Barnes, an analyst at Bloomberg Intelligence in Washington. It also comes as a shock to policy and legal analysts because the court had lifted a previous stay involving the same permit, said Christi Tezak, managing director at ClearView Energy Partners. The Aug. 29 decision to lift the original stay, put in place in late June, looked “encouraging” for Mountain Valley and the Corps, she said.

New Permit

ROO.AI Oil and Gas Field Service Software

Shares of EQT Midstream fell as much as 2 percent in New York on Wednesday. The Pittsburgh-based company is “disappointed” with the decision and is in the process of figuring out whether it can continue with construction that doesn’t include stream and wetland crossings along the affected portion of the pipeline route, spokeswoman Natalie Cox said in an emailed statement.

The developer expects to apply for a new Army Corps permit once West Virginia’s proposed water-crossing modifications are considered. Mountain Valley anticipates receiving a new permit early in 2019, allowing it to maintain is target of being fully in-service in the fourth quarter of next year, Cox said.

Mountain Valley has faced mounting legal and regulatory hurdles, forcing its developer to raise cost estimates by almost $1 billion. The project has been pushed back by a year; it was previously planned to start up in the fourth quarter of 2018.

FERC Action

The ruling is likely not a “catastrophe” for Mountain Valley, “despite its suddenness and scope,” Height Securities LLC analyst Katie Bays said in a note. “The most significant impact of the decision will be uncertainty” as the company figures out how to address the court’s directive and whether changing construction methods would raise costs even more. Still, Bays said, the project will likely be able to meet its most recent timeline.

The Federal Energy Regulatory Commission, which oversees state-crossing gas pipelines, will likely halt all construction on the project in response to the court’s most recent order, Barnes said. Work on the pipeline was already ordered to stop for about a month after the U.S. Court of Appeals for the Fourth Circuit vacated permits from the Bureau of Land Management and Forest Service.

Mountain Valley would transport Appalachian shale gas 303 miles (488 kilometers) from northwestern West Virginia to southern Virginia. The project is a joint venture between EQT Midstream, NextEra Energy Inc., Consolidated Edison Inc., AltaGas Ltd. and RGC Resources Inc.

Share This:

More News Articles