June 25 (Reuters) - EQT Midstream Partners will stop construction in West Virginia of parts of its $3.5 billion Mountain Valley natural gas pipeline, after a U.S. federal appeals court issued a stay order last week against a permit, a U.S. regulator and the company said.
The pipeline company will not proceed with construction in waters affected by the stay order in West Virginia, the U.S. Federal Energy Regulatory Commission said in a document issued on Monday.
Mountain Valley Pipeline told FERC it was consulting on the implications of the stay issued by the U.S. Court of Appeals for the Fourth Circuit with the U.S. Army Corps, which gave the permit in December 2017, FERC said in the notice.
In May, The U.S. Army Corp of Engineers pulled a permit for the Mountain Valley natural gas pipeline from West Virginia to Virginia.
"While we are disappointed with this temporary setback, the team is evaluating its legal and regulatory options to reinstate the permit and continue with construction activities along this portion of the route," EQT Midstream said in a statement dated June 22.
The Sierra Club and four other environmental groups had challenged permits that the Army Corps of Engineers had issued for construction of the pipeline across streams in the state.
The order stops "construction activities in 591 streams and wetlands in West Virginia and it may affect construction along the entire route of the pipeline," the Sierra Club said in a statement.
A string of orders against the 303-mile (488-kilometer) pipeline could delay the project, which was expected to be in service by late 2018. It was designed to deliver up to 2 billion cubic feet per day of gas from the Marcellus and Utica shale formations in Pennsylvania, West Virginia and Ohio to meet growing demand for the fuel for power generation and other uses in the U.S. Southeast and Mid-Atlantic.
One billion cubic feet of gas is enough to fuel about 5 million U.S. homes for a day.
The project is owned by units of EQT Midstream, NextEra Energy Inc, Consolidated Edison Inc, WGL Holdings Inc and RGC Resources Inc. EQT Midstream will operate the pipeline and owns a significant interest in the joint venture. (Reporting by Nallur Sethuraman in Bengaluru; Editing by David Gregorio)