Despite their recent win in the Supreme Court three weeks ago, the companies involved in the project are throwing in the towel.
From The Charlotte Business Journal
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 more.
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 $60 billion, allowing them to absorb the impact more easily.
It is still a blow, however.
“We regret that we will be unable to complete the Atlantic Coast Pipeline,” Dominion’s Farrell says. “For almost six years we have worked diligently and invested billions of dollars to complete the project and deliver the much-needed infrastructure to our customers and communities.”
This is a great tragedy for the poorest counties in Central Virginia. A source of low cost, low polluting energy would have provided feedstock for manufacturing.
Instead, limousine liberals want a “natural” retreat from government and other high paying jobs in overcrowded Northern Virginia.
Hmmm…..
“The Tennessee Valley Authority is a corporate agency of the United States that provides electricity for business customers and local power companies serving 10 million people in parts of seven southeastern states. TVA receives no taxpayer funding, deriving virtually all of its revenues from sales of electricity. In addition to operating and investing its revenues in its electric system, TVA provides flood control, navigation and land management for the Tennessee River system and assists local power companies and state and local governments with economic development and job creation.”
How about a National Defense Energy Authority? Build big next generation nuclear plants on military bases and sell the excess into the commercial grid.
Time to fight lawfare with lawsuits. First, fire everyone in the EPA and hire back only the ones that aren’t affiliated with environmental organizations and that don’t have close ties to them. Over the last 40 years the EPA has been infiltrated by environmentalist groups. Second, the energy companies (or the states who stand to lose revenue from future projects) need to counter-sue the organizations behind these these suits for damages equivalent to lost revenue ($ billions) for filing frivolous lawsuits and require them in the future to submit their own expensive, torturous studies showing that the extensive environmental impact statements submitted by energy companies aren’t sufficient according to the regulations already in place before they can even initiate a lawsuit. Let’s bankrupt every one of the Greenie Goons organizations or make it so prohibitively expensive for them to file these suits that they stop doing it.
Exactly. Time to turn their tactics on them. Make them play defense, and actually prove their unprovable claims.
Let the fracking bastards freeze in the dark!
Mr. Middleton,
I second that motion.
Personally I think Duke and Dominion’s lawsuit explanation is a smoke screen.
The more likely explanation is both companies want to lower their debt to equity ratios and increase their liquidity in the face of an uncertain electricity market. Keep in mind that because of the Pandemic the EIA is forecasting a 5% decrease in overall demand for electricity for 2020… I think this may be optimistic; but, I digress.
Both companies have (or had) substantial debt at the end of March 31, 2020. Duke’s debt to equity ratio was 1.25 and Dominion’s 1.14. In addition, in this uncertain market, both companies would benefit from increased liquidity. Duke’s quick ratio (a measure of liquidity) was 0.45 and Dominion’s 0.47 at the end of March.
The bottom line. This deal allows Duke and Dominion to decrease their debt exposure, increase their access to ready cash, simplify their business model to concentrate on core functions (particularly with regards to operations versus capital expenditure) , and decrease head count. In turn Berkshire Hathaway Inc. (AKA Warren Buffet), who’s cash rich, gets an pretty nifty gas project at a good price.
It’s a win/win for all. Duke & Dominion get rid of $5.7 billion in debt and get $4 billion in cash. Berkshire Hathaway gets a unfinished asset it can eventually take to market. And… both Duke and Dominion will likely profit from increased regional gas availability when Berkshire Hathaway completes the project.
You can be darned sure Mr. Buffet approved the purchase with a firm eye on long term profit. So, I don’t see this announcement as a death of the pipeline project. It simply a new beginning with the new owner in a stronger cash position.
I wish I could say that the pipeline crosses 600 miles of forward thinking land owners and wise communities who know that a pressure gas pipeline is a conflagration waiting to happen in their backyard or town, never defendable from the most trivial attacks by terrorists or vandals.
But no… just greedy opportunists. Ambulances packed with lawyers screaming up and down the proposed corridor conducting an eBay-style auction of easement payola coordinated and destined to escalate — like the tale of the Frog and the Scorpion — to project insolvency.
It’s worth a glance at the Germans’ insane hydrogen airship era. They were obviously imagining a world without a single wayward spark.
It is hilarious to imagine if the era had continued right up to Hitler’s time and he launched his air offensives from bomb-dropping behemoths in the sky. Doom! How funny would be the fiery speeches of comic book indignation as they popped off one by one, perhaps from archers with longbows shooting flaming arrows. “What an ruthless enemy! Who could have foreseen this?” Hitler sputters. “Has anyone the simple decency to let us to conduct this war?”
Yes, long haul gas pipelines strike me this way.. it’s that crazy. Conflagrations single or coordinated, failures that starve and spin down just-in-time natural gas electric grid generation plants perched at the far ends. In Winter of course. Darkness and cold! Who’da thunk it!
Nuclear energy is the only thing left on the table.