EQT and its midstream partner Equitrans Midstream Corp. (ETRN) are squabbling over a pipeline through Greene County that will carry gas from this region to the Mountain Valley Pipeline, when completed
The Hammerhead Pipeline is a 190-mile long gathering pipeline, with a total capacity of 1.6 billion cubic feet (Bcf) per day, which was recently completed through Greene County and into northwestern West Virginia, where it connects to transmission lines operated by Texas Eastern, Dominion and the MVP.
Gathering pipelines are used to transport gas from a well to a processing plant or a transmission line or main, according to the Pipelines and Hazardous Materials Safety Administration. Transmission pipelines, like the MVP, are used to transport natural gas from their respective gathering systems to larger refining, processing, or storage facilities. They can be several feet wide and hundreds of miles long.
Equitrans said the Hammerhead line was placed in service effective Aug. 1. EQT has a 1.2 Bcf per day firm capacity commitment on the pipeline. EQT disagrees that the line is in service and says its can therefore terminate its agreement and take ownership of the line.
“It has recently come to our attention that EQT has a mistaken belief that the Hammerhead pipeline is not in-service under the terms of its agreement; and, on that basis, that EQT believes it may terminate the gathering agreement and take title to the Hammerhead pipeline in exchange for a reimbursement payment. EQT, acting through its financial advisor, has attempted to market ETRN’s Hammerhead pipeline, which action constitutes unlawful conduct,” said a statement posted on the Equitrans Midstream website. Equitrans is demanding that EQT “immediately case” marketing the pipeline.
In a filing with the Securities and Exchange Commission, EQT said the gas gathering agreement can be terminated because the Mountain Valley Pipeline has not yet been completed and the Hammerhead Pipeline is therefore unable to supply it with gas. It claims the agreement would allow it to take ownership of the pipeline by paying 88 percent of the expenses incurred.
EQT and Equitrans were once part of the same company, but the midstream business was spun off from EQT in 2018. Equitrams continues to transport most of EQT’s natural gas and EQT also owns a stake in the company as well as the MVP.
The MVP is a 42-inch transmission pipeline that spans approximately 303 miles from northwestern West Virginia to southern Virginia that will take up to two million dekatherms per day of Appalachian natural gas to markets in the Mid- and South Atlantic regions of the United States. However, its construction has been repeatedly delayed by legal and regulatory challenges and it is still not in use.
“While we disagree with EQT’s actions, ETRN remains committed to pursuing a resolution to this dispute. ETRN’s duty, first and foremost, is to its shareholders, and ETRN will firmly pursue all available legal avenues or remedies to protect its investment in the Hammerhead pipeline,” the Equitrans statement indicates.
Pipelines are vital to move gas from wells to markets and to move gas from the Marcellus shale to other regions. Many gas drilling companies, including EQT, have spun off their midstream, or pipeline transportation, operations as a way to increase cash flow while retaining a relationship, and in some cases, a financial stake.