NATURAL GAS

With Atlantic Coast dead, is this pipeline next?

The death of the long-embattled Atlantic Coast pipeline has energized environmental and public health groups looking to bring down other major oil and gas projects.

For many in the Appalachian region, that means the 300-mile Mountain Valley pipeline, which is being built to move natural gas from northwestern West Virginia to southern Virginia and has faced similar backlash from local community groups.

But the project's developer, EQM Midstream Partners LP, insists the pipeline is on track to come online next year, and some analysts say the demise of the Atlantic Coast line could actually boost Mountain Valley's prospects. Dominion Energy Inc. and Duke Energy Corp. axed the Atlantic Coast natural gas transmission pipeline Sunday, citing ongoing delays and concerns over the $8 billion project's economic viability (Energywire, July 5).

"It is a somewhat positive development for Mountain Valley because the Appalachian region is still a prolific gas-producing basin," said Sreedhar Kona, a senior oil and gas analyst with Moody's Investors Service.

"There is gas that needs to get out, and now there is one less pipeline that can carry it."

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Joe Dawley, a partner at Earth & Water Law who helped lead the push on the Mountain Valley pipeline project as a top attorney for natural gas producer EQT Corp., echoed this sentiment. He said that without the Atlantic Coast pipeline, Mountain Valley will have access to dedicated federal resources.

"There are limited agency resources, so one less large project on their plate is beneficial to Mountain Valley," he said. "But at the same time, the environmental scrutiny will be higher."

Indeed, environmental groups have found recent success by dragging fossil fuel projects through litigation battles. Lawyers with the Southern Environmental Law Center succeeded in getting the 4th U.S. Circuit Court of Appeals to stall the Atlantic Coast pipeline by arguing the permitting process was hurried and flawed (Energywire, July 7).

"Those types of things slowed the project down, led to project delays and cost increases, which in turn led to the decision Dominion made" to cancel the project, which would have spanned West Virginia, Virginia and North Carolina, Dawley said.

"The attacks by the environmental community and [nongovernmental organizations] have been good and successful at slowing these projects down."

Gillian Giannetti, a staff attorney with the Natural Resources Defense Council, dismissed the idea that without the Atlantic Coast pipeline, Mountain Valley could corner the market.

"Mountain Valley still suffers from critical problems that were present before the Atlantic Coast pipeline was canceled," she said. "The biggest issue is these projects were not based on independent market demand."

Instead, she said they were based on corporate contracts that were enough for the Federal Energy Regulatory Commission, which approves gas pipeline permits, to sign off on their construction. FERC considers a contract for natural gas to demonstrate sufficient public need.

"In order for there to be competition for the Mountain Valley pipeline, there has to be demand in that area, and overall demand for gas in Virginia, North Carolina and the region has shrunk dramatically," Giannetti said.

She also cited a lack of necessary permits and recent environmental fines as obstacles for the project.

The Mountain Valley pipeline's developer was fined $2.15 million last year to resolve environmental damage caused by the project (Energywire, Dec. 16, 2019). Construction is currently on hold while the developer awaits a biological opinion from the Fish and Wildlife Service. The project also needs a right of way permit from the Forest Service.

Still, Natalie Cox, a spokeswoman for EQM, said it's on track to go into service in early 2021. She dismissed the idea that the cancellation of the Atlantic Coast pipeline could be a harbinger for Mountain Valley.

"From the beginning, [the Atlantic Coast pipeline] and Mountain Valley Pipeline (MVP) have been very different projects, as evidenced by the fact that total project work for MVP is roughly 92% complete," she said in a statement. By contrast, only about 6% of the Atlantic Coast pipeline was in the ground when it was canceled.

Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis, said that although Mountain Valley's near-completion makes a difference, financial conditions can change.

"I would not rule out that the combined impact of environmental and finance is enough to cause a final decision to step back from it," Sanzillo said of Mountain Valley. "Just because it's mostly built doesn't mean it's going to be used. We are seeing increasingly large write-offs in the sector as finances weaken."

Sanzillo said the Atlantic Coast pipeline, the Dakota Access oil project and the Williams natural gas pipeline in New York all showed the same "disregard for environmental law and the protection they're supposed to afford to the environment." All three, he added, demonstrate that the finances of "these pipelines are far weaker now than when they were originally planned."

The same could apply to Mountain Valley, Sanzillo said.

But Cox said Mountain Valley's transportation capacity has been "fully subscribed since the onset of the project."

"MVP will play a critical role in meeting the growing demand for a reliable, affordable, clean-burning source of domestic energy in the mid-Atlantic and Southeastern United States," she said.

Legal battles

Kona of Moody's said recent court decisions have also benefited Mountain Valley, including the Supreme Court's decision this week to allow the Army Corps of Engineers to resume using its streamlined water-crossing permit for the construction of oil and gas pipelines (Greenwire, July 6).

Kona cautioned, however, that if new developments lead to cost overruns or further delays, Moody's would likely take another look at the project's financial rating.

"The company has done everything in its power to make progress, though I don't know what else is out there from the environmental groups," he said. "There are things that could be challenged in due course of time, and there could be future litigation."

Environmentalists are gearing up for more legal action.

"The fight against Mountain Valley continues," said Anne Havemann, general counsel at the Chesapeake Climate Action Network. "They are farther along in the construction process, but they've also faced numerous environmental issues."

While Mountain Valley has "a lot of pipe in the ground," the battle isn't over, said David Sligh, conservation director at Wild Virginia. Its completion would only cause greater environmental damage and pain for people along the way, he added.

"Without question, [developers] want everybody — especially, I'm sure, investors and decisionmakers — to believe that it's a done deal, and that is far from the case," Sligh said.

Sligh said Wild Virginia can now focus more attention on Mountain Valley because it's no longer directing energy toward the Atlantic Coast pipeline. He said the group is preparing for the release of a biological opinion from the Fish and Wildlife Service and deciding whether a legal case goes ahead.

He also said the Army Corps can't make "a valid finding" that Mountain Valley qualifies for a Nationwide Permit 12 for crossing water because of "dire" impacts caused by the project.

"Mud that continues to flow off MVP sites, even while construction is halted, shows that the company is neither able nor willing to live up to its responsibilities to protect our waters, even after being cited for hundreds of violations," Sligh said.

He added that the Atlantic Coast victory has strengthened the resolve of Wild Virginia, which is "just as determined to see this unjust and damaging project canceled, as well."

Russell Chisholm, co-chair of the Protect Our Water, Heritage, Rights coalition, said both the Mountain Valley and Atlantic Coast pipelines have been "doomed from the start."

"Like MVP, Dominion's disaster has been propped up by hollow and baseless assurances to investors and regulators alike," Chisholm said in a statement Sunday. "Only four months ago Dominion argued before the U.S. Supreme Court they should be permitted to burrow their pipeline under the historic and iconic Appalachian Trail. Dominion's abandonment of this project serves as a reminder to all who are working for environmental justice: stick together, keep fighting, keep showing up for each other."

Political reaction to Dominion and Duke's termination of the Atlantic Coast pipeline has been mixed. Sens. Joe Manchin (D-W.Va.) and Shelley Moore Capito (R-W.Va.) both said the loss of the project would mean fewer jobs and expressed disappointment about its cancellation (E&E Daily, July 7).

Rep. Don Beyer (D-Va.), however, said the pipeline's dissolution was "great news" for Virginia. He urged Dominion to funnel more money into clean energy sources instead.

"I remain concerned, however, about the prospect of the Mountain Valley Pipeline, which would have harmful impacts on the environment, and threaten the destruction of key sections and vistas on the Appalachian Trail," Beyer said in a statement Monday. "Virginians do not need or want this pipeline."

Madelon Finkel, a professor at Weill Cornell Medicine in New York and author of "Pipeline Politics: Assessing the Benefits and Harms of Energy Policy," said Mountain Valley was "vulnerable to begin with" because it's over budget, is behind schedule and has a history of work-stop orders. Like the Atlantic Coast pipeline, it is also set to move through an environmentally sensitive area.

Whether Mountain Valley can enter service by early next year is an open question, Finkel said.

"Certainly environmentalists would be energized by this recent court ruling and again look to block construction and block Mountain Valley from going forward," said Finkel. "That certainly is a logical reaction to this week's ruling."

Twitter: @AriannaSkibellEmail: askibell@eenews.net

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