BUCKHANNON—Despite the 7-2 victory decision at the United States Supreme Court last month, Dominion and Duke Energy disappointed state officials with a surprising announcement of their decision to cancel the Atlantic Coast Pipeline (ACP) on July 5.
Dominion and Duke Energy came to this decision due to the “ongoing delays and increasing cost uncertainty, which threaten the economic viability of the project,” their joint press release stated. Recent developments have reportedly created an unacceptable wave of uncertainty, and even more anticipated delays for the ACP.
For example, the U.S. District Court for the District of Montana made the decision to overturn long-standing federal permit authority for waterbody and wetland crossings, followed by a Ninth Circuit ruling on May 28, which indicated that an appeal is unlikely to be successful. These rulings posed a new and serious challenge for the ACP. It is likely that the decisions made by the Montana District Court would prompt similar challenges in other circuits related to permits.
The succession of legal challenges to the project’s federal and state permits reportedly caused significant cost increases and delays. As a result of lawsuits and decisions, recent public guidance of project cost has increased from the original $5 billion to $8 billion, as well as a predicted three-and-a-half-year delay.
Given this information and litigation risk, among other implementation risks, Dominion and Duke Energy said they felt the project’s future was too uncertain to justify investing any more shareholder capital.
Dominion Energy Chairman, President and Chief Executive Officer Thomas F. Farrell, II, along with Duke Energy Chair, President and Chief Executive Officer Lynn J. Good stated: “We regret that we will be unable to complete the Atlantic Coast Pipeline. 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. Throughout, we have engaged extensively with and incorporated feedback from local communities, labor and industrial leaders, government and permitting agencies, environmental interests and social justice organizations. We express sincere appreciation for the tireless efforts and important contributions made by all who were involved in this essential project. This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States. Until these issues are resolved, the ability to satisfy the country’s energy needs will be significantly challenged.”
According to a joint press release from the West Virginia Oil and Natural Gas Association (WVONGA) and the Independent Oil and Gas Association of West Virginia (IOGAWV), the ACP project was supporting more than 17,000 jobs, with wages exceeding $400 million. The ACP reportedly drove billions into the state’s economy, while secondary industries experienced economic benefits as well. As a result, West Virginia reported revenue boosts with the additional tax dollars trickle-down effect supporting a vast array of supports and services to the region. Both groups assert, “Now, court battles and permitting obstacles have derailed the ACP and have come between hard-working West Virginians and their future. We can’t say if the project will eventually continue, but we do know the process shouldn’t be so arduous.”
The ACP was developed in 2014 to meet the needs of communities across the region and to support the transition to cleaner energy. Although the need still exists, the legal uncertainty is too much to continue moving forward. Over the duration of six years, tens of thousands of people across West Virginia, Virginia and North Carolina have contributed to the growth of this project. “To the ACP team members, partners, contractors and supporters, we thank you,” the ACP press release stated.
WVONGA and IOGAWV attempted to look for the silver lining in the decision and added, “The announcement that Berkshire Hathaway Energy, a subsidiary of Warren Buffett’s company, is acquiring Dominion Energy’s natural gas transmission and storage business, gives us hope. The move represents a nearly $10 billion investment in the Appalachian Basin. Buffett is betting on us, and that’s a wonderful show of confidence.” The associations assure they remain committed to the Mountain State and said, “The Berkshire Hathaway announcement is a boon for this state and region, and we remain focused on a prosperous tomorrow as we move forward.”