The lead developer of the Mountain Valley Pipeline is sticking to a time frame for finishing the long-delayed project that a significant customer believes is unlikely.
But the lead developer, Equitrans Midstream Corp., acknowledged in a federal filing Tuesday that opposition has made it increasingly harder to finish the project, and that further project challenges could drive its partners away from the project and imperil the venture.
Canonsburg, Pennsylvania-based Equitrans said in a Securities and Exchange Commission filing that opposition from activists through lawsuits resulting in “significant, adverse decisions” on project authorizations have made it “increasingly difficult” to place the project in service.
Adverse court rulings and regulatory decisions could increase the risk of joint venture partners choosing not to fund the project, Equitrans warned.
EQT, a subscribed Mountain Valley Pipeline customer, indicated a belief that an in-service date before the end of 2024 was unlikely drove a liability reduction decision it made last year in its own SEC filing last week.
But Equitrans chairman and CEO Thomas Karam said in the company’s year-end 2022 earnings call Tuesday the company expects regulatory approvals needed for project work to resume to be issued this spring, allowing the company to bring the pipeline into service in 2023 after four to five months of remaining construction.
For companies backing the project, waiting on its completion has come at a heavy cost they’ve looked to lessen.
The project is costing Equitrans $20 million to $25 million per month, largely for maintenance of rights-of-way, Karam said in a quarterly earnings call in November.
Equitrans said last year it took a $1.9 billion impairment charge in the fourth quarter of fiscal year 2021 because of its investment in the project. An impairment is a loss in the value of an asset.
RGC Resources Inc., the parent company of Roanoke Gas Company, reported a $29.6 million impairment charge for one of its subsidiaries, RGC Midstream, related to its investment in the project last year.
Pittsburgh-based EQT chose to take $196 million in cash from Equitrans last year rather than waiting for roughly $235 million in gathering fee relief to be given in two years after the long-delayed pipeline would go into service.
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In January 2022, the 4th U.S. Circuit Court of Appeals invalidated federal approval for the pipeline to cross the Jefferson National Forest.
Then in February 2022, the court struck down a conclusion by the U.S. Fish and Wildlife Service that constructing the pipeline is unlikely to jeopardize endangered species. That move prompted the U.S. Army Corps of Engineers to commit to withholding a key water discharging permit until there is a valid conclusion on the project’s effects on potentially threatened species.
Environmental groups behind court challenges to the project have called on its developers to abandon it, something Atlantic Coast Pipeline developers did in 2020 as costs mounted amid legal setbacks. The Atlantic Coast Pipeline would have transported natural gas supplies from West Virginia to public utilities in Virginia and North Carolina.
Environmentalists have decried the 42-inch-diameter, 303-mile Mountain Valley Pipeline’s affects on water and soil quality, as well as its potential greenhouse gas emissions.
Equitrans has estimated that total greenhouse gas emissions would amount to 48 million to 57 million metric tons per year.
The West Virginia Department of Environmental Protection released a consent order last year requiring Mountain Valley to pay a $303,000 fine for violating permits by failing to control erosion and sediment-laden water, mostly for violations documented in 2019. That penalty followed a $266,000 fine from the state in 2019 for similar erosion and water contamination issues.
Equitrans has said the project is 94% complete, but pipeline opponents have contested that estimate. They have pointed to recent estimates reported by Mountain Valley Pipeline LLC that final restoration is little more than halfway done.
Mountain Valley Pipeline LLC is the joint venture behind the project, which was first announced in 2014. The project cost has ballooned from $3.5 billion to $6.6 billion amid its many regulatory and legal challenges.
The lingering legal limbo has disheartened project proponents who have placed a greater premium on increasing Appalachia’s gas outflow capacity to meet growing demand for United States gas exports — especially liquefied natural gas.
The Mountain Valley Pipeline is slated to provide up to 2 billion cubic feet per day of natural gas from the Marcellus and Utica shale formations to markets in the Mid-Atlantic and Southeastern regions of the country. The project covers Wetzel, Harrison, Doddridge, Lewis, Braxton, Webster, Nicholas, Greenbrier, Fayette, Summers and Monroe counties in West Virginia.
Appalachian gas and oil producers have lamented a lack of takeaway capacity in the region resulting from the pipeline’s limbo. Takeaway capacity is the ability to get a product out of the area via pipelines, trucks or rails.
