trending Market Intelligence /marketintelligence/en/news-insights/trending/rrhuctmf-ba53lialdbvyg2 content esgSubNav
Log in to other products

 /


Looking for more?

Contact Us
In This List

'Bad time' for Atlantic Coast, Mountain Valley pipelines, analysts say

Blog

COVID-19 Impact & Recovery: Energy Outlook for H2 2021

Blog

US utility commissioners: Who they are and how they impact regulation

Video

Climate Credit Analytics: Linking climate scenarios to financial impacts

Blog

Essential Energy Insights, April 2021


'Bad time' for Atlantic Coast, Mountain Valley pipelines, analysts say

Energy industry analysts agreed that the moves of the Federal Energy Regulatory Commission to halt construction on the $6 billion to $6.5 billion Atlantic Coast Pipeline LLC project and the $3.5 billion to $3.7 billion Mountain Valley Pipeline LLC project will likely slow the two Mid-Atlantic interstate natural gas transportation projects.

FERC's Office of Energy Projects issued a stop order for the Dominion Energy Inc.-led pipeline project and the related Supply Header project on Aug. 10, following the U.S. Court of Appeals for the 4th Circuit's decision to strip a U.S. National Park Service right-of-way permit that allowed the pipeline to run under the Blue Ridge Parkway. The appeals court also clarified a previous decision that vacated an U.S. Fish and Wildlife Service incidental take statement, which allows limited disturbance to wildlife. (U.S. Court of Appeals for the 4th Circuit dockets 18-1082, 18-1083)

Industry observers expected the Atlantic Coast stop order after FERC issued a halt on Aug. 3 to the EQT Corp.-led Mountain Valley gas pipeline project. The FERC order on Mountain Valley also came in response to the 4th Circuit vacating federal permissions. (U.S. Court of Appeals for the 4th Circuit dockets 17-1271)

The Atlantic Coast project developers, which include Dominion, Duke Energy Corp. and Southern Co. Gas, are cooperating with FERC and the other federal agencies to regain the lost permissions. According to Dominion spokesman Aaron Ruby, the developers expect the National Park Service and Fish and Wildlife will "promptly reissue" the permits and the 1.5-Bcf/d interstate natural gas pipeline project to meet an in-service date in the fourth quarter of 2019.

"We are confident these issues can be resolved quickly without causing unnecessary delay to the project," Ruby said Aug. 10.

Mountain Valley developers have also insisted the project will meet an early 2019 in-service date. Mountain Valley is a joint venture of EQT's EQT Midstream Partners LP, Con Edison Gas Pipeline and Storage LLC, NextEra Energy Inc., RGC Midstream LLC and WGL Midstream Inc.

Pipeline industry analysts said the orders stopping construction make the projected start dates for the two pipelines uncertain. The combination of rising costs and lengthy litigation could prompt regulators to take a closer look at the need for the pipelines.

In short, Height Capital Markets analysts Katie Bays and Josh Price said, "it's a bad time to be a pipeline developer in the Mid-Atlantic region."

But another observer said the FERC orders could help the pipelines avert a worse fate. The orders could dissuade the 4th Circuit from granting a stay proposed by opponents the projects, and in so doing leave the decision of restarting construction with FERC.

"Even if reroutes and additional processes wind up necessary, we believe that FERC's control over construction restart could allow work to resume more quickly than if the courts grant stay requests," ClearView Energy Partners Managing Director Christi Tezak said.

Still, the "open-ended nature" of the stop order for the Atlantic Coast pipeline could result in delays, Tezak said in an Aug. 13 email. "As it is not clear how much work needs to be done by either the Fish & Wildlife or Park Services, we cannot offer an estimate at this time," she said.

Bays and Price were skeptical that the pipelines' routes will remain unchanged. They gauged that the additional analysis could delay both projects until the end of 2019, a more significant impact for the 2-Bcf/d Mountain Valley pipeline, which has a closer in-service date than the Atlantic Coast pipeline. The analysts cautioned that if the 600-mile Atlantic Coast pipeline is rerouted to avoid environmental impacts to the Blue Ridge Parkway, the project could require another year of construction.

"If new routes are required, as we anticipate, we expect the lack of a third Republican commissioner broadly undermines FERC's support for new infrastructure projects," the analysts said in an Aug. 13 note.

FERC Commissioner Robert Powelson resigned Aug. 10, leaving fellow Republicans Chairman Kevin McIntyre and Commissioner Neil Chatterjee evenly weighted against Democrats at the agency, commissioners Cheryl LaFleur and Richard Glick. In recent FERC orders, LaFleur and Glick have dissented based on what they see as shortcomings in the commission's approach to pipeline projects, including its analysis of public need and climate impacts. If the trend continues, the disagreement could leave FERC votes on gas infrastructure projects, rehearings and policy issues deadlocked.