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    Mountaineer XPress Cost Soars

Summary

Labour costs, permitting delays blamed

by: Dale Lunan

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Natural Gas & LNG News, Americas, Corporate, Investments, Political, Regulation, Infrastructure, Pipelines, News By Country, United States

Mountaineer XPress Cost Soars

Columbia Gas Transmission, a unit of Canadian pipeline developer TransCanada, said in a July 3 filing with US regulators that the cost of its 2.7bn ft3/day Mountaineer XPress pipeline project in the Appalachian region has increased by nearly 50%.

Columbia revealed the cost increase in a filing to the Federal Energy Regulatory Commission seeking amendments to certain Mountaineer XPress rates because of the increase, which has pushed the estimated cost of the project to some $3.03bn from $2.03bn.

Columbia said the cost increase was largely the result of higher than expected labour, inspection and outside services costs “that substantially exceeded the contingency established for such charges.”

“A major increase in pipeline construction activity occurred in the Marcellus and Utica Shale regions from 2014-2017, when Columbia planned and constructed the Mountaineer XPress Project,” the filing said. “This boom in pipeline construction led to increased costs associated with land acquisition and contractor services.”

Labour costs have doubled, to $1.8bn from $930mn, Columbia Gas said in its filing, while the cost of outside services has soared by more than 780% and engineering and inspection costs have jumped by 87%.

The company also said it had experienced “unexpected permitting delays” that added to the cost over-runs, echoing concerns expressed by Stanley Chapman, president of TransCanada’s US natural gas pipelines division, at the World Gas Conference in Washington, DC last month.

“Clearly, we are seeing price signals in New England that say more infrastructure is needed, but building in that part of the world is extremely difficult, as we’ve seen several competitor projects not being able to be permitted,” Chapman told NGW on the sidelines of the conference. “We’re seeing more and more projects being held up by real strict additional review by the NGOs and the like and a judge halting construction on an approved project that is already underway.”

Despite the cost over-runs, Columbia still expects portions of the Mountaineer XPress system to enter service in September.