The Daley Note: June 6, 2023
A new federal government funding bill contains a golden ticket for Mountain Valley Pipeline (MVP) and sponsor Equitrans Midstream (ETRN), designed to end the permitting troubles holding up the 2 Bcf/d pipeline project.
ETRN shares jumped over 40% last week after Congressional leaders introduced the bipartisan debt ceiling deal with pro-MVP language. President Biden signed the Fiscal Responsibility Act of 2023 on Saturday (June 3) after the bill cleared the US House and Senate last week. The bipartisan legislation suspends the debt ceiling and lowers federal spending.
Mainly intended to avert default on federal debt, the 100-page legislation includes supportive language on pages 95-98 designed to liberate MVP from its permitting problems. “Congress hereby finds and declares that the timely completion of construction and operation of (MVP) is required in the national interest,” the bill states.
The legislation affirms the legality of all existing approvals for MVP and directs all federal agencies to maintain their authorizations. It also directs the Army Corps of Engineers to issue a final permit for crossing waters, providing a 21-day window for the Secretary of the Army to issue all necessary permits. Based on the June 3 signing of the bill, those permits are due by June 24, 2023.
On the legal front, the legislation places any challenges to MVP exclusively within the jurisdiction of the US Court of Appeals for the District of Columbia. The provision would move the project out of the Fourth Circuit Court of Appeals, which has repeatedly struck down permits for MVP. In May, the Fourth Circuit invalidated water quality permits from West Virginia state regulators.
After starting construction in 2018, MVP has faced multiple challenges over compliance with environmental regulations, its construction methods across waterbodies, and right-of-way through a 3.5-mile section of the Jefferson National Forest. In May, the Biden administration approved a permit allowing the pipeline to run through the Jefferson National Forest.
MVP is 94% complete, according to Equitrans. In a new statement, the company said it continues to target start-up of MVP by YE23 at an estimated cost of $6.6B. The latest legislation is a huge win for ETRN and the pipeline, but MVP is still likely to face court challenges. East Daley currently models MVP start-up in 4Q24 in the Northeast Supply and Demand Forecast,, though we expect to revise that outlook based on the latest developments.
Due to low natural gas prices and producer guidance for flat production this year, our regional egress stack currently shows spare near-term capacity for Marcellus and Utica producers (see figure). However, the region will need more pipeline capacity when LNG demand begins to ramp post-2026. MVP will be critical during this period to allow the Northeast industry to participate in future market expansions. – Zach Krause Tickers: ETRN.
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