A major U.S. natural gas pipeline project that’s crucial for shale drillers in the Appalachians is now in doubt after a court rejected its permit to cross a national forest in the Virginias.
The U.S. Court of Appeals for the Fourth Circuit on Tuesday tossed the federal government’s approval for Equitrans Midstream Corp.’s $6.2 billion Mountain Valley Pipeline to go through Jefferson National Forest, sending the shares of the company slumping the most since March 2020.
Mountain Valley, which is more than 90 per cent complete, aims to provide drillers in the gas-rich Appalachian Basin with much-needed takeaway capacity, after projects from Dominion Energy Inc., Duke Energy Corp. and Williams Cos. were scrapped amid fierce opposition from environmental groups.
Equitrans shares lost 17 per cent in New York, the biggest decline since March 2020, with the plunge triggering a circuit breaker. Utility giant NextEra Energy Inc., which also owns a stake in the project, fell 8.3 per cent to the lowest level since July. The announcement that Jim Robo is stepping down as chief executive officer also weighed on the Florida utility shares.
The Bureau of Land Management and U.S. Forest Service’s reauthorizations for the project didn’t consider sedimentation and erosion impacts, prematurely approved the use of a conventional bore method to build stream crossings, and failed to comply with the Forest Service’s 2012 planning rule, the court said.
“We are thoroughly reviewing the court’s decision regarding MVP’s crossing permit for the Jefferson National Forest and will be expeditiously evaluating the project’s next steps and timing considerations,” said Equitrans Midstream Corp. spokeswoman Natalie Cox.
Equitrans, which owns 48 per cent of the 303-mile conduit, was targeting full operations at the pipeline by next summer.
The decision likely means the conclusion of the pipeline, which is already four years behind schedule and costs almost twice as much as initially planned, may be pushed back into 2023, according to Brandon Barnes, a Bloomberg Intelligence analyst. The ruling also “doesn’t bode well” for another pending case in the same court related to a key species permit that spans much more of the unconstructed pipeline, Barnes added.
Environmental group Sierra Club, which opposes the project, had a grimmer outlook.
“Three billion over budget, years behind schedule, and facing mounting legal hurdles, today’s decision makes it highly unlikely that this dirty, dangerous, and unnecessary fracked gas pipeline will ever be completed,” the group’s senior director of energy campaigns, Kelly Sheehan, said in an emailed statement.
In 2020, Dominion Energy and Duke Energy scrapped an $8 billion Atlantic Coast gas project, and Williams abandoned its Constitution gas pipeline and its Northeast Supply Enhancement plan. In September, the $1 billion PennEast conduit project was also halted after failing to receive water-quality certification and other wetland permits for the New Jersey section.
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