July 27, 2018 / 10:20 PM / 4 months ago

UPDATE 1-U.S. court vacates two permits for EQT Mountain Valley gas pipeline

(Adds comment from Mountain Valley Pipeline spokeswoman)

July 27 (Reuters) - A U.S. appeals court on Friday vacated decisions by two federal agencies that allowed EQT Corp to build its $3.5 billion to $3.7 billion Mountain Valley natural gas pipeline from West Virginia to Virginia across federal land.

The case is the latest victory in the U.S. Court of Appeals for the Fourth Circuit by the Sierra Club and other opponents of the pipeline.

Analysts at Height Capital Markets in Washington said the decision could delay the project's in-service date until the fourth quarter of 2019.

The Sierra Club and others challenged decisions by the U.S. Bureau of Land Management and the U.S. Forest Service granting the pipeline rights of way across federal land.

The court concluded certain aspects of the federal agencies' decisions failed to comply with the National Environmental Policy Act, the Mineral Leasing Act and the National Forest Management Act.

"Mountain Valley Pipeline is working with the agencies to evaluate the effect of the order on construction activities in the National Forest, which amounts to about 1 percent of the overall project route," said Natalie Cox, a spokeswoman for MVP.

The court remanded the case back to the BLM and Forest Service for further proceedings.

Mountain Valley is one of several pipelines expected to enter service over the next year or two 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 and Canada.

On Thursday, EQT delayed the targeted completion date for Mountain Valley to the first quarter of 2019 from late 2018.

In explaining the delay, the company cited legal challenges in the Fourth Circuit by the Sierra Club and others to a permit issued by the U.S. Army Corps of Engineers that allowed the pipeline to cross streams and rivers in West Virginia, among other issues.

The 303-mile (488-kilometer) pipeline is designed to deliver up to 2 billion cubic feet per day of gas 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 is enough gas to supply about five million U.S. homes for a day.

Mountain Valley is owned by units of EQT, NextEra Energy Inc , Consolidated Edison Inc, AlatGas Ltd and RGC Resources Inc. EQT Midstream Partners LP will operate the pipeline and owns a significant interest in the venture.

In April, the companies said they planned to spend about $350 million to $500 million to extend the pipeline about 70 miles from Virginia into North Carolina by the fourth quarter of 2020.

Reporting by Scott DiSavino; Editing by Dan Grebler and Tom Brown

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