The lead company behind the Mountain Valley Pipeline said this week that the natural gas project will cost $600 million more than previously estimated and won’t be operational until next year.
In a filing with the U.S. Securities and Exchange Commission, Equitrans Midstream said the 303-mile pipeline from West Virginia into southern Virginia now is estimated to cost $7.2 billion, up from a previous estimate of $6.6 billion, because of challenges including workforce shortages, difficult terrain and inflation. Furthermore, the company anticipates that the pipeline will be operational in the first quarter of 2024, not by the end of this year as previously stated.
This marks the latest in a yearslong series of cost increases and timeline delays for the controversial project, which was first announced in 2014 and was initially expected to be complete in 2018 on a budget of $3.5 billion but has been delayed repeatedly by permitting challenges and legal battles.
“Certain unforeseen factors have substantially affected the pace of construction and account for more than half of the increase in estimated project costs,” Equitrans Midstream said in its filing, dated Tuesday. “The ramp up of MVP’s contractor workforce has been slower and more challenging than expected, due to multiple crews electing not to work on the project based on the history of court-related construction stops, and the inability to recruit crews with required and sufficient experience.
“Additionally, productivity and cost have been adversely affected in areas of challenging terrain and geology, in part because of the MVP Joint Venture’s commitment to, and application of, heightened environmental protocols. The MVP Joint Venture will continue to prioritize the safety of its workforce, communities, and assets, and the project’s compliance with applicable environmental standards and regulations.”
Equitrans Midstream said the remaining cost increase was due to financial settlements with contractors, inflation, and enhanced safety and security measures.
“While the remaining construction is subject to certain factors, including, among others, the physical construction conditions, crew availability, and productivity during the winter season, the MVP Joint Venture has made meaningful forward construction progress and construction will continue into the winter months, with the goal of responsibly completing the remaining construction activity and realizing the benefits of the MVP project for a diverse mix of stakeholders as promptly as practicable,” the company said in its filing.
Pittsburgh-based Equitrans Midstream (NYSE:ETRN), which said it expects to hold about a 49% stake in the Mountain Valley Pipeline based on current cost estimates, is scheduled to report its third-quarter earnings on Oct. 31. Four other companies also have ownership stakes in the project.
Supporters say the pipeline is a critical infrastructure project that will help transport natural gas from the Marcellus and Utica shale deposits to mid- and south Atlantic U.S. markets, bolstering the nation’s domestic energy supply. Environmentalists and landowners along the pipeline’s route have called it unnecessary and unsafe and have criticized its environmental impact and its use of eminent domain to acquire private property.
In a statement, Denali Nalamalapu, communications director for the Protect Our Water, Heritage, Rights Coalition, which opposes the pipeline, called the pipeline “objectively useless” and said “it poses a mortal danger to people living on the route.”
“MVP is a fracked gas pipeline blaming workers for why it hasn’t been able to complete the project during a climate crisis. This mayhem underlines the need for a just transition to renewable energy — where workers and frontline communities are centered and fossil fuels are phased out. The MVP is an embarrassment to every bank, insurer, government, and agency who has ever touched it and must be stopped now,” Nalamalapu said.
The 42-inch-diameter pipeline is set to start in northwestern West Virginia and run into Virginia, passing through Giles, Craig, Montgomery, Roanoke and Franklin counties before connecting to a compressor station in Pittsylvania County.
Equitrans Midstream has said the pipeline is more than 90% complete, but much of what remains are forests, stream crossings and wetlands, or what the company dubbed “challenging terrain” in its filing.
On June 3, President Joe Biden signed into law the Fiscal Responsibility Act to avoid the federal government defaulting on its debts. That law also ordered government agencies to approve any remaining permits the pipeline needed while shielding the project from legal challenges.
In August, a three-judge panel of the Richmond-based 4th U.S. Circuit Court of Appeals dismissed lawsuits against the pipeline brought by environmental groups, saying the Fiscal Responsibility Act had eliminated its jurisdiction over those cases.
Earlier this month, Equitrans Midstream and the federal U.S. Pipeline and Hazardous Materials Safety Administration announced a consent agreement over concerns that some segments of unburied pipe had been left exposed to sunlight and weather for too long, potentially eroding a protective coating and making those segments less safe.
Under the terms of the agreement, a third-party engineering firm is expected to audit Mountain Valley’s pipeline coating activities, and the pipeline must undergo a series of tests before and after it goes online to ensure the integrity of the pipe.
On Monday, a group of Southwest Virginia landowners suing Mountain Valley Pipeline in federal court filed for an emergency injunction, hoping to stop construction work until a court resolves their lawsuit, which claims Congress improperly delegated eminent domain powers to the Federal Energy Regulatory Commission, allowing the pipeline company to seize their land.
The filing asks for an injunction no later than Tuesday, saying “irreparable injury escalates daily” as “bulldozers are on the property” and “smoke can be seen rising over the land.”