Panel Favors Equitrans in EQT PA-WV Hammerhead NatGas Pipe Dispute

(Reuters) — U.S. pipeline company Equitrans Midstream Corp said on Tuesday that an arbitration panel ruled in its favor in a dispute with EQT Corp over the delayed startup of the Hammerhead natural gas pipe in Pennsylvania and West Virginia.

Hammerhead is a gathering pipeline designed to feed about 1.6 billion cubic feet per day (bcfd) of gas into the Mountain Valley pipe once that long-delayed project enters service.

Equitrans said the 2.0-bcfd Mountain Valley pipe from West Virginia to Virginia was on track to enter service in the summer of 2022 at a cost of around $6.2 billion.

Equitrans has said Hammerhead cost about $555 million to build. EQT, the biggest U.S. gas producer and former parent of Equitrans, has a contract to transport about 1.2 bcfd on Hammerhead.

In a filing with the U.S. Securities and Exchange Commission, Equitrans said the arbitration panel determined the in-service delay for Hammerhead was caused by a force majeure.

Hence, EQT has no early termination right under the Hammerhead agreement or related right to purchase the Hammerhead project, according to the Equitrans filing.

"We are pleased with the panel’s unanimous decision (and) look forward to continuing our long-standing partnership with EQT," Equitrans spokesperson Natalie Cox said in an email, noting Hammerhead has been "ready and waiting" for the completion of Mountain Valley.

EQT said in an email that it was "disappointed" but appreciates "having a resolution to this dispute."

Mountain Valley is one of several U.S. pipelines delayed by regulatory and legal fights with environmental and local groups that found problems with federal permits issued by the Trump administration.

When Mountain Valley started construction in February 2018, it estimated the 303-mile project would cost about $3.5 billion and enter service by late 2018.

Mountain Valley is owned by units of Equitrans, which has a 47.8%-interest in the project and will operate the pipeline, NextEra Energy, Consolidated Edison, AltaGas and RGC Resources.

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