Despite another setback, corporate customers stick with Mountain Valley Pipeline

Despite another setback, corporate customers stick with Mountain Valley Pipeline

Only $3 for 13 weeks

Once again, developers of the Mountain Valley Pipeline say it will take longer and cost more to finish a natural gas pipeline that has long invoked acrimony along its path through Southwest Virginia.

But all five energy companies in the joint venture seem determined to ride it out, despite contracts signed years ago that allow them to withdraw if the project was not completed by June 1.

“Roanoke Gas needs the MVP supply,” said Paul Nester, president and CEO of a utility that will tap gas from the transmission line. When completed, Mountain Valley will span 303 miles from northern West Virginia to Pittsylvania County, where it will connect with another pipeline.

Fierce opposition since the project was announced in 2014 has led to repeated cost overruns and delays.

When construction began in the winter of 2018, Mountain Valley said it would be done by the end of the year at a cost of $3.7 billion. Two weeks ago, the company said work will continue until early 2021, with a price tag that could balloon to $5.7 billion.

Most work is currently stalled by legal challenges from environmental groups.

But in announcing the latest delay on June 11, Mountain Valley said the buried pipeline is 92% completed. Having invested so much already, the partners seem unwilling to give up at this point.

Under so-called precedent agreements, shippers — or customers — of the pipeline must give notice by the end of the month to take the escape clause. Doing so would require them to pay their share of costs incurred so far, plus an additional 15% of that sum.

In most cases, the shippers are subsidiaries of companies that are financing the project through other subsidiaries. Roanoke Gas, for example, is a subsidiary of RGC Resources. A second subsidiary, RGC Midstream, is paying for its share of the project and will have a 1% ownership interest.

Were the company to bail out now, Roanoke Gas would owe the amount cited in the precedent agreement in addition to the $52 million that RGC Midstream has invested in the pipeline so far.

Nester said the company has no intention of pulling out.

Other partners in the joint venture are EQM Midstream Partners, which will own close to half of the pipeline and operate it once it’s completed; NextEra Energy Capital Holdings; Con Edison Transmission; and WGL Midstream.

A spokesman for WGL declined to comment last week. Other companies could not be reached.

According to a filing with the U.S. Securities and Exchange Commission last November, Consolidated Edison will cap its investment in the project at about $530 million, reducing its ownership interest from 12.5% to 10%. EQM will cover the shortfall created by the New York-based utility, it reported in its own filing.

Mountain Valley said it could not talk about the details of the shipper agreements.

“However, we can confirm that we have not received notice from any MVP shippers regarding an intention to exercise their termination right and do not expect to receive any,” company spokeswoman Natalie Cox wrote in an email.

When the Federal Energy Regulatory Commission approved the project in 2017, it found there was a public need for the 2 billion cubic feet of natural gas a day it will transport under high pressure.

“This important infrastructure project is needed to serve the growing demand for a reliable source of domestic, clean-burning energy in the mid-Atlantic and southeast regions of the United States,” Cox wrote.

Others are not convinced.

A campaign started last week by a citizen group is urging Roanoke Gas to pull out of what it calls a “bad deal.”

Today’s energy market does not need the natural gas that will be extracted from the Marcellus and Utica shale formations in a controversial process known as fracking, critics say.

Opponents also point to the environmental harm that has been caused by clearing land and digging trenches for the 42-inch diameter pipe along steep mountain slopes and through clear-running streams. Mountain Valley has been cited repeatedly by regulators in the two Virginias for not following erosion and sediment control measures.

Freeda Cathcart, a Roanoke Gas customer, is leading an effort by Mothers Out Front Roanoke and New River Valley to pressure the company to get out of the deal before it’s too late.

Cathcart expressed concerns that the expense of building the pipeline and the higher cost of gas it will deliver will be passed on to consumers. “It’s really irresponsible for them not to leave,” she said.

Nester, however, said there is no additional firm capacity from the two sources that currently serve Roanoke Gas, the East Tennessee and Columbia Gas pipelines.

Mountain Valley supporters say it will lead to increased economic growth in the region, including Franklin County, to which Roanoke Gas will add service through a tap of the pipeline at the Summit View Business Park.

Yet on June 11, Mountain Valley was forced to announce another setback.

“While the additional legal and regulatory reviews have caused schedule delays and cost adjustments, we look forward to MVP’s safe, successful start-up” in early 2021, Diana Charletta, president and chief operating officer of EQM Midstream Partners, said in a news release.

Last October, FERC ordered a cease to all construction except for stabilization and erosion control measures.

Before restarting work on the remaining pipeline, Mountain Valley must regain authorizations to pass through the Jefferson National Forest, cross nearly 1,000 streams and wetlands, and build the pipeline in a way that does not harm endangered species.

Those permits were set aside after the Sierra Club and other conservation groups raised multiple concerns about the project’s environmental impact. Most of the legal challenges were brought in the 4th U.S. Circuit Court of Appeals.

In its news release, Mountain Valley said it expects the U.S. Fish and Wildlife Service to soon issue a new biological opinion, which would deal with protecting the Roanoke logperch and other endangered species.

Assuming that FERC would then lift its stop-work order, construction of some parts of the pipeline could resume as early as next month.

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