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EQM Midstream Partners Idea Proposal (EQM)

EQM Midstream Partners Idea Proposal (EQM)
 

Will EQM’s Mountain Valley Pipeline ever get completed? Can it meet its new project deadline of mid-2020?

Report Available: September 25, 2019

 

Blueshift’s initial research found EQM and its partners’ Mountain Valley Pipeline (MVP) project continuing to battle legal and regulatory challenges in its effort to complete construction. Continuous headwinds since the start of the project have come from environmental groups, local and state governments, land owners, and regulators. EQM has aggressively navigated the litigation but setbacks have caused the company to delay its completion timeline and incur additional production costs, fines and mitigation cost along the way. Projects like the MVP typically face these kinds of operational challenges, but investors have concern that the project will continue to be interrupted by delays, shutdowns and escalating costs that could cause its demise.

 

Observations

  1. The MVP project is a key future growth driver for majority holder EQM (45.5%) and an important future gas transportation asset for its partners NEE, ED, TSX:ALA and RGCO. The MVP is a 300-mile, 42-inch diameter natural gas interstate pipeline with a targeted capacity of 2.0 Bcf per day that will span from EQM’s existing transmission and storage system in Wetzel County, West Virginia to Pittsylvania County, Virginia, providing access to the growing demand markets in the Southeast.
  2. Construction of the MVP began in the spring of 2018 with a completion goal of Q4 2019, after three years of project planning that included civil and environmental surveys, route planning, public hearings, responses and adjustments to address comments and concerns of landowners, community members, government agencies, and elected officials located along the proposed route.
  3. From the start of construction and throughout the MVP project, numerous headwinds confronted EQM. Protesters sit in tree tops and chain themselves to construction equipment along the proposed route. Work stoppages are imposed by The Virginia Department of Environmental Quality due to environmental issues. Here is a sample of challenges the MVP project faced in August alone that have hampered management and construction:
  • Aug 30: two protester were arrested for locking themselves to MVP construction equipment.
  • Aug 28: the Federal Energy Regulatory Commission requested that the U.S. Fish and Wildlife Service start over on its permitting process for the MVP because the project does not have a valid Biological Opinion and Incidental Take Statement. Work on the MVP could stop until the proper permits can be obtained.
  • Aug 27: MVP gets FERC approval for water crossing changes.
  • Aug 21: seven organizations asked a federal court to stay a 2017 approval for the pipeline by the U.S. Fish and Wildlife Service to protect endangered species.
  • Aug 15: the MVP voluntarily suspended work three days after a lawsuit raised questions about its impact on endangered species.
  • Aug 2: a federal court refused Mountain Valley Pipeline’s request to remove tree sitters in Virginia.
    • Aug 2: the Virginia Department of Environmental Quality ordered a halt to construction on part of the MVP because “an imminent and substantial adverse impact to water quality is likely to occur as a result of land-disturbing activities.”
  1. Despite all the lawsuits, challenges and protests, EQM reported that the MVP project is 85% complete and predicts it will now be completed by mid-2020. However, the project is still navigating permit problems and a resolution to a land swap deal with the Jefferson National Forest. Diana Charletta, Chief Operating Officer of EQM, said, “… we are working diligently to resolve the project’s remaining legal and regulatory issues.”

 

 

Will the MVP project meet it new completion date of mid-2020? Will it be completed at all? What does EQM need to do to resolve the current issues causing delays? How likely is it that EQM can do this? In what timeframe? What new headwinds and roadblocks could further delay the project? Is there a risk that project partners and customers could abandon support of the project? How would partner/customer departures impact EQM?  To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: MVP contractors and suppliers, Pipeline operators, Local, state and federal government officials, Environmental groups, and Industry specialists.  

 

Companies: EQM Midstream Partners (EQM), AltaGas Ltd. (TSX:ALA), Con Edison (ED), NextEra Energy Inc. (NEE), and RGC Resources Inc. (RGCO)

 

Research Begins: September 9, 2019

 

 

To see other ideas Blueshift Research is currently working on, please click here.

 

 

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