Despite their recent win in the Supreme Court three weeks ago, the companies involved in the project are throwing in the towel.
The $8 billion, 600-mile long Atlantic Coast Pipeline is dead.
Dominion Energy Inc. and Duke Energy Corp. are canceling the project because of continuing court delays likely to drive the price tag higher. That would threaten the economic viability of the project, they say.
And bound up in the cancellation is Dominion’s decision, announced separately, to sell it gas transmission business to Berkshire Hathaway Energy for $4 billion in cash and the assumption of $5.7 billion in debt.https://www.bizjournals.com/charlotte/news/2020/07/05/duke-energy-dominion-abandon-the-atlantic-coast-p.html
Endless lawfare from multiple directions is just making it too much of an uphill battle.
“This announcement reflects the increasing legal uncertainty that overhangs largescale energy and industrial infrastructure development in the United States,” say Dominion CEO Tom Farrell, and CEO Lynn Good in a joint statement, speaking of the cancellation of the pipeline. “Until these issues are resolved, the ability to satisfy the country’s energy needs will be significantly challenged.”
Duke and Dominion specifically cite the April decision by a federal judge in Montana that vacated a key water permit for the controversial Keystone XL pipeline issued by the U.S. Army Corps of Engineers.
Known as a Nationwide Permit 12, the permission to cross water bodies and wetlands was issued under an expedited process also used to permit the ACP. A decision by the 9th Circuit Court of Appeals at the end of May allowing the order to stand until it is heard on the merits threatened to delay the Duke and Dominion project for at least a year.
“The Montana district court decision is also likely to prompt similar challenges in other Circuits related to permits issued under the nationwide program including for ACP,” Duke and Dominion say in their joint press release.
The partners note that appeals court indicated an appeal is not likely to be successful in the Keystone case, creating “new and serious challenges.”
“The potential for a Supreme Court stay of the district court’s injunction would not ultimately change the judicial venue for appeal nor decrease the uncertainty associated with an eventual ruling,” the release says.
And the cancellation also recognizes the reality that the 4th Circuit Court of Appeals has consistently ruled against the pipeline on every challenge to various permits that have come before it to date.
The companies will have significant write downs, but will carry on.
The ACP faced opposition from the outset. And its abandonment is clearly a setback for Duke and Dominion. Still, the economic loss is nowhere near as serious, for instance, as abandoning the $25 billion V.C. Summer plant was for the now-defunct SCANA Corp. in South Carolina. That was a “bet the farm” project for the small power company, now a part of Dominion. Duke and Dominion both have market caps of more than $60 billion, allowing them to absorb the impact more easily.
It is still a blow, however.
“We regret that we will be unable to complete the Atlantic Coast Pipeline,” Dominion’s Farrell says. “For almost six years we have worked diligently and invested billions of dollars to complete the project and deliver the much-needed infrastructure to our customers and communities.”