With the cost of construction skyrocketing, FERC has approved a request from Columbia Gas Transmission (CGT) to increase the initial monthly incremental recourse reservation rate on the Mountaineer XPress Project by 49% from the $9.827/Dth originally authorized.
The $14.663/Dth approved by the Federal Energy Regulatory Commission is meant to cover increased costs for the pipeline, which would increase natural gas pipeline capacity out of the Appalachian Basin by expanding the TransCanada Corp. affiliate's system in West Virginia [CP16-357].
Estimated cost of construction has increased from $2.06 billion to $3.03 billion since the filing of the original application in April 2016, CGT said in its FERC filing.
"Columbia states the primary reason for the increase in costs is related to contractor labor costs, inspection costs, and outside services costs that substantially exceeded the contingency established for such charges," FERC said. "According to Columbia, the recent surge of pipeline construction activity in the Marcellus and Utica Shale regions caused costs associated with land acquisition and contractor services for the Mountaineer XPress Project to increase.
“Columbia also reports that unexpected permitting delays further increased the cost of constructing the project in accordance with shippers' requested in-service dates."
FERC issued a certificate of public convenience and necessity for the Mountaineer XPress project in January. The project would add 164.5 miles of 36-inch diameter pipe and six miles of 24-inch diameter pipe to expand CGT's system. It would also include three compressor stations in Doddridge, Calhoun and Jackson counties, WV; two regulating stations in Jackson and Cabell counties; and various other facilities, upgrades and replacements.
Mountaineer XPress would add about 2.7 Bcf/d of capacity to the Columbia Gas system and is designed to allow additional volumes of Marcellus and Utica shale gas to reach markets in the Midwest, Northeast, South and Gulf Coast.
The anticipated in-service date for the project is late this year.