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Troubled $4.6 billion shale pipe hits new snag on court order

Bloomberg logoBloomberg 10/3/2018 Rachel Adams-Heard

In this Feb. 1, 2012 file photo, miles of pipe ready to become part of the Keystone Pipeline are stacked in a field near Cushing, Okla.© Sue Ogrocki/AP Photo In this Feb. 1, 2012 file photo, miles of pipe ready to become part of the Keystone Pipeline are stacked in a field near Cushing, Okla. A $4.6 billion shale gas pipeline that’s already been delayed by about a year is facing yet another setback after a court vacated a key permit.

A U.S. appeals court voided a federal authorization for EQT Midstream Partners LP’s Mountain Valley conduit, which is designed to carry natural gas from the Marcellus basin in Appalachia -- America’s biggest reservoir of the fuel -- to Southeast markets.

The court sided with environmental groups in a ruling Tuesday, saying the Army Corps of Engineers wasn’t allowed to require a certain method for building across rivers after West Virginia had already imposed a special condition for that work.

The decision is “a huge blow to the project and a real surprise to us,” said Brandon Barnes, an analyst at Bloomberg Intelligence in Washington.

A spokeswoman for EQT Midstream didn’t immediately respond to a request for comment.

a screenshot of a video game: EQT shares have slipped 21% since a federal court stayed a key permit© Bloomberg EQT shares have slipped 21% since a federal court stayed a key permit

Mountain Valley has faced mounting legal and regulatory hurdles, which have pushed the project’s start date to the fourth quarter of 2019 from its original timeline a year earlier and forced the developer to raise cost estimates by almost $1 billion.

Other eastern U.S. pipeline projects, including Dominion Energy Inc.’s Atlantic Coast line, have faced similar woes. The conduits would join several built in the region over the past few years as Marcellus drillers seek outlets for abundant shale supply.

The same court in late June issued a stay on a portion of the Army Corps’ permit, which was lifted on Aug. 29. Since the initial stay, EQT Corp. has seen its shares fall 21 percent.

The Federal Energy Regulatory Commission, which oversees state-crossing gas pipelines, will likely halt all construction on the project in response to the court’s most recent order, Barnes said. Work on the pipeline was already ordered to stop for about a month after the U.S. Court of Appeals for the Fourth Circuit vacated permits from the Bureau of Land Management and Forest Service.

Mountain Valley would transport Appalachian shale gas 303 miles (488 kilometers) from northwestern West Virginia to southern Virginia. The project is a joint venture of EQT Midstream, NextEra Energy Inc., Consolidated Edison Inc., WGL Holdings Inc., and RGC Resources Inc.

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