EQM says 'unlikely' to complete Mountain Valley natgas pipe in 2019

(Reuters) - EQM Midstream Partners LP said Tuesday it was “unlikely” to complete the long-delayed $4.6 billion Mountain Valley natural gas pipeline from West Virginia to Virginia during 2019 due to ongoing legal and regulatory challenges.

EQM, however, said in its first-quarter earnings report that the joint venture building the project “continues to target a full in-service date for the fourth quarter 2019.”

EQM Chief Executive Thomas Karam told analysts on a call that the project was about 80 percent complete and the company remained confident it would get the pipeline built.

When EQM started construction in February 2018, it estimated Mountain Valley would cost about $3.5 billion and be completed by the end of 2018.

The 303-mile (488-km) pipeline is designed to deliver 2 billion cubic feet per day (bcfd) of gas.

One billion cubic feet is enough gas to supply about 5 million U.S. homes for a day.

EQM said it is working through the project’s remaining challenges, including securing a Nationwide 12 Permit from the U.S. Army Corps of Engineers for stream and waterbody crossings, which it expects sometime this summer.

Analysts at Height Capital Markets in Washington, however, said they do not expect Mountain Valley to receive a new Nationwide Permit 12 until the fourth quarter of 2019, which likely will delay the project’s completion until mid-2020.

In addition to Mountain Valley, environmental legal challenges have also slowed construction of Dominion Energy Inc’s $7.0 billion to $7.5 billion Atlantic Coast gas pipe from West Virginia to North Carolina.

Mountain Valley and Atlantic Coast are the biggest pipelines under construction to connect growing output in the Marcellus and Utica shale basins in Pennsylvania, West Virginia and Ohio with customers in other parts of the United States.

Mountain Valley is owned by units of EQM, NextEra Energy Inc, Consolidated Edison Inc, AltaGas Ltd and RGC Resources Inc. EQM will fund about $2.2 billion of the project and operate the pipe.

Equitrans Midstream Corp of Pittsburgh owns the general partner and a majority interest in EQM.

EQM is also developing the $555-million Hammerhead project between Pennsylvania and West Virginia, which will feed up to 1.6 bcfd of gas into Mountain Valley and other pipes when it enters service in the fourth quarter of 2019.

EQM has a contract to transport 1.2 bcfd on Hammerhead from EQT Corp, the nation’s biggest gas producer and the former parent of EQM and Equitrans.

Reporting by Scott DiSavino; Editing by Jonathan Oatis and James Dalgleish