Oil and Gas

UPDATE 1-MVP Southgate natgas pipe startup seen in 2021 despite N.Carolina permit denial

(Adds comment from North Carolina DEQ)

Aug 12 (Reuters) - The companies developing the Mountain Valley Southgate natural gas pipeline expansion from Virginia to North Carolina said on Wednesday they continue to target a 2021 startup for the project after North Carolina regulators denied a water permit.

The North Carolina Department of Environmental Quality (DEQ) denied the permit on Tuesday due to uncertainty around whether Equitrans Midstream Corp will complete the $5.4-$5.7 billion Mountain Valley Pipeline (MVP) from West Virginia to Virginia. A unit of Equitrans is leading the MVP project.

“We are disappointed by the decision,” project spokesperson Shawn Day said, noting “Work on MVP is 92% complete and is targeted to enter service in early 2021.”

MVP is one of several U.S. pipelines delayed by regulatory and legal fights with environmental and local groups that found problems with federal permits issued by the Trump administration.

Other projects similarly held up include Dominion Energy Inc’s recently-canceled $8 billion Atlantic Coast gas pipe from West Virginia to North Carolina.

“(Southgate) has always been an unnecessary project that poses unnecessary risks to our environment and given the uncertain future of the MVP Mainline. North Carolinians should not be exposed to the risk of another incomplete pipeline project,” DEQ Secretary Michael Regan said in a statement.

“North Carolina’s clean energy future is not dependent on adding more gas infrastructure,” Regan said.

The North Carolina rejection caused some analysts to question whether Equitrans will be able to finish Southgate by the end of 2021, if ever.

“We are skeptical the DEQ will issue the permit until MVP is fully operating, if ever,” analysts at Height Capital Markets said, noting they expect MVP to enter service in 2021.

When Equitrans started construction on MVP in February 2018, it estimated the project would cost about $3.5 billion and enter service by the end of 2018.

Reporting By Scott DiSavino Editing by Marguerita Choy