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Why Supreme Court Ruling is Good News for Mountain Valley Pipeline

Source: Pittsburgh Business Times, July 7, 2020

A Supreme Court ruling has cleared one of the obstacles for the completion of the Mountain Valley Pipeline.

The 303-mile pipeline through West Virginia and Virginia will carry natural gas from the Marcellus and Utica shales to markets in the Southeast and could be extended in the near future to North Carolina. MVP has been mired in legal challenges ever since it was announced in 2014, but the company that will operate the pipeline, Pittsburgh-based Equitrans Midstream Corp. (NYSE: ETRN), has been able to complete about 92% of MVP.

One of the outstanding hurdles before MVP can be completed and then turned online was a Montana court’s halting of the US Army Corps of Engineers’ ability grant a Nationwide Permit 12 (NWP12), which allows a pipeline company to apply for a blanket permit to cross waterbodies instead of having to apply for a permit for every crossing. MVP, and other pipelines, had been caught up in an unrelated legal battle.

The Supreme Court ruled late Monday that a Montana judge’s cancellation of the Nationwide 12 permit for pipelines was partially invalid and that seems to clear a hurdle for many pipeline projects. The US Army Corps of Engineers now has clearance to begin issuing the permits again.

“We anticipate the USACE (US Army Corps of Engineers) to begin reinstating its NWP12 program in the coming days, after which time the MVP project team expects to receive a new or reissued NWP12 for the project,” said spokeswoman Natalie Cox.

The news brought renewed optimism to the completion of the MVP, which has been halted temporarily due to a stop-work order from the Federal Energy Regulatory Commission, a biological opinion and the NWP12 permits. It could get all those permits by the end of the summer in time to finish the work and then also have it in service by early 2021, as the company reaffirmed Monday.

“This (Supreme Court) decision helps confidence that MVP will continue as planned,” said Rob McBride, senior director of strategy and analytics at Enverus Energy.

Matthew Lewis, senior director of East Daley Capital, agreed that the ruling was good news for Mountain Valley Pipeline but that it seemed a specific permit could be challenged in court. That could mean that if MVP were to receive the nationwide permit it could still be potentially challenged in court. There have been many legal challenges to the MVP project since it was announced in 2014.

There’s no doubt that Sunday and Monday brought a mixed bag of news for the pipeline and natural gas industry.

First was the cancellation of the Atlantic Coast Pipeline by Dominion Energy (NYSE: D) and Duke Energy (NYSE: DUK), an $8 billion project that was to carry Marcellus and Utica Shale natural gas from northern West Virginia to Virginia and North Carolina. Then a federal judge forced the shutdown of the Dakota Access pipeline for a stronger environmental review. Even the Supreme Court ruling invalidating the previous hold on Nationwide 12 permits was a mixed blessing. The justices specifically excluded the Keystone XL pipeline.

McBride said the gas industry has gotten a wakeup call in recent days about the power of the opposition to new pipeline projects and may have to take stock existing projects.

“Pipelines are not necessarily the most important piece to the puzzle but they are the easiest to oppose, therefore the resistance against them is getting so strong in light of the energy transition,” he said. “See Dominion walking away from this project with what they have invested.”

He said that’s big wind out of the sails of any expansion projects.

“It’s not supported by any true additional need for pipeline capacity,” Anderson said.

Tom Sanzillo, director of finance for the Institute for Energy Economics, noted MVP was facing significant cost overruns and said the rising costs are putting to risk the rate of return.

“Future delays will impact final decisions. This factor may be offset by the wider customer base that is part of its business model,” Sanzillo said. “The ultimate fate of the pipeline is uncertain.”

Sunday’s news about the cancellation of the Atlantic Coast Pipeline was joined by Monday’s court ruling that shut down the Dakota Access Pipeline, another major pipeline in the United States.

“We are deeply troubled by these setbacks for U.S. energy leadership,” said American Petroleum Institute President and CEO Mike Sommers. “Our nation’s outdated and convoluted permitting rules are opening the door for a barrage of baseless, activist-led litigation, undermining American energy progress and denying local communities the environmental employment and economic benefits modern pipelines provide.”

Kurt Knaus, a spokesman for the Pennsylvania Energy Infrastructure Alliance, a group of skilled labor organizations and chambers of commerce, said the commonwealth and others would be feeling the impact of the ACP cancellation.

“It is catastrophic in terms of the billions of dollars in investments that are lost and the thousands of jobs that are gone,” Knaus said. “And this sudden jolt to the market comes at a time when our national economy could use a lift. The entire Appalachian region will feel the effects over the long term until other energy interstates open up to get our gas to market.”