By Katherine Blunt
The builders of the Atlantic Coast Pipeline are pulling the plug
on the project as companies continue to meet mounting environmental
opposition to new fossil fuel conduits in the U.S.
Duke Energy Corp. and Dominion Energy Inc. said Sunday that they
were abandoning the proposed $8 billion pipeline -- which aimed to
carry natural gas 600 miles through West Virginia, Virginia and
North Carolina and underneath the Appalachian Trail -- citing
continued regulatory delays and uncertainty, even after a favorable
Supreme Court ruling last month.
Dominion meanwhile said it was selling the rest of its natural
gas transmission and storage network to Warren Buffett's Berkshire
Hathaway Inc. for $9.7 billion including debt. The deal includes a
25% stake in the Cove Point liquefied natural gas export facility
in Maryland, which will remain majority owned by Dominion.
"This announcement reflects the increasing legal uncertainty
that overhangs large-scale energy and industrial infrastructure
development in the United States," the companies said in a joint
statement. "Until these issues are resolved, the ability to satisfy
the country's energy needs will be significantly challenged."
Utilities and pipeline companies have been trying to expand U.S.
pipeline networks for more than a decade to take advantage of the
bounty of oil and gas unlocked by the fracking boom. But many of
the projects have encountered intense opposition from landowners,
Native American groups and environmental activists concerned about
climate change who want to keep fossil fuels in the ground.
The Keystone XL pipeline expansion to carry oil from Canada to
the U.S. Gulf Coast remains unbuilt more than a decade after it was
first proposed by TC Energy Corp. The operator of the Dakota Access
pipeline, Energy Transfer LP, completed the conduit to carry oil
from North Dakota's Bakken shale region to Illinois in 2017 after
years of protests and delays.
The Trump administration has sought to make it easier for
companies to build pipelines and other energy infrastructure, but
their efforts thus far have failed to fast-track projects amid
continued legal and regulatory challenges by opponents.
Dominion and Duke had first proposed building the Atlantic Coast
Pipeline in 2014. It repeatedly faced legal challenges from
environmentalists, Native American groups and others. Its costs had
swelled to $8 billion before the companies decided to abort the
plan.
The companies had scored a significant victory last month when
the Supreme Court ruled that it could cut under the historic
Appalachian Trail, which runs from Georgia to Maine. The court
overturned a lower-court ruling that found the U.S. Forest Service
didn't have the authority to grant a special-use permit that
allowed for the development of that segment.
However, Duke and Dominion said Sunday that the ruling wasn't
enough to mitigate an "unacceptable layer of uncertainty and
anticipated delays" for the project. They cited a Montana court
ruling last month that threw another roadblock in the path of the
Keystone XL Pipeline as an example of the continued challenges such
projects face.
That ruling, which related to a federal permitting program for
oil and gas pipelines, had the potential to also further delay the
Atlantic Coast Pipeline, the companies said. The companies involved
had together invested about $3.4 billion in the pipeline to
date.
Duke, based in Charlotte, N.C., provides electric and gas
service to more than nine million customers in the Carolinas, the
Midwest, Florida and Tennessee.
Dominion, based in Richmond, Va., provides electricity or
natural gas to about 7 million customers in 20 states. It will
almost entirely exit its gas transmission business with the sale of
its pipeline and storage assets to Berkshire Hathaway Energy.
As part of the deal, Berkshire Hathaway Energy will acquire
Dominion Energy Transmission, Questar Pipeline and Carolina Gas
Transmission, as well as a 50% stake in Iroquois Gas Transmission
System.
Berkshire Hathaway Energy will also acquire 25% of Cove Point
LNG, one of six liquefied natural gas export facilities in the U.S.
Dominion will retain a 50% stake in the project, with Brookfield
Asset Management owning the remaining 25%.
Berkshire Hathaway Energy operates a $100 billion portfolio of
utility, transmission and generation businesses providing natural
gas and electricity to more than 12 million customers. The Dominion
acquisition will add 7,700 miles of natural gas storage and
transmission pipelines and about 900 billion cubic feet of gas
storage to its holdings.
"Acquiring this portfolio of natural gas assets considerably
expands our company's footprint in several Eastern and Western
states as well as globally," Bill Fehrman, Berkshire Hathaway
Energy's president and CEO, said in a statement.
The $9.7 billion transaction includes $5.7 billion in debt. It
is expected to close in the fourth quarter.
Dominion said the sale will allow it to focus on its
state-regulated gas and electric utilities. It expects those
businesses, primarily those serving Virginia, Ohio, Utah and the
Carolinas, will account for as much as 90 percent of future
operating earnings.
Dominion and Duke have each been pushing to slash their carbon
emissions in response to state mandates and customer concerns about
climate change. Both companies are aiming for net-zero carbon
emissions by 2050 by developing more wind and solar power and
investing in other clean technologies.
Duke said that it plans to invest in renewable energy, battery
storage and energy efficiency programs as it works to find cleaner
ways to generate power.
"While we're disappointed that we're not able to move forward
with ACP, we will continue exploring ways to help our customers and
communities, particularly in eastern North Carolina where the need
is great," Chief Executive Lynn Good said in a statement.
Write to Katherine Blunt at Katherine.Blunt@wsj.com
(END) Dow Jones Newswires
July 05, 2020 15:20 ET (19:20 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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