Delays hike cost of Mountain Valley pipeline: EQT

EQT boosted its cost estimate for the 1.9 Bcf/d (54mn m³/d) Mountain Valley natural gas pipeline by about one-fourth to $4.6bn on construction halts caused by federal and state regulators.

EQT attributed about half of the cost increase to extended periods of work stoppage last month that triggered ongoing contractual and schedule changes for the pipeline that will extend 303 miles (488km) from West Virginia to Virginia. The company last month delayed the pipeline's in-service date by a full year to late 2019.

Costs to build natural gas pipeline projects in the US are rising on increased regulatory scrutiny and unexpected delays. Industry group the Interstate Natural Gas Association of America last year estimated the average cost nationwide at $230,000 for each inch of pipeline diameter per mile, up by 46pc from the 2016 estimate, and said project costs are routinely higher in the northeast US.

The US Federal Energy Regulatory Commission (FERC) in early August halted work on the line because it said there was risk of disturbing the environment for a pipeline that would have to be abandoned or relocated as a part of the project. FERC later that month reversed its decision, authorizing crews to finish construction on more than 90pc of the pipeline's route.

A West Virginia circuit court decision last week dealt the project's construction schedule another blow, halting work on the line where it would cross the Greenbrier river in Summers County. The court decision resulted from an environmentalist group's appeal of the West Virginia Department of Environmental Protection's decision to issue a water certificate to the line.

Analysis firm BTU Analytics earlier this month said halts on Mountain Valley are the "latest examples of the potential state and federal flip-flopping that can go on during construction". The firm released an analysis of large-scale pipeline projects in the US northeast that placed Mountain Valley at the second-highest cost per mile, but EQT's updated cost estimate places the project at the top of that list.

EQT yesterday said despite construction interruptions from court challenges, more than 50pc of the project should be completed by the end of the year and it continues to target an in-service in the fourth quarter of 2019.