Dominion cancels Atlantic Coast Pipeline, announces sale of natural gas transmission and storage assets
Dominion Energy, Virginia’s largest electric utility and a major U.S. energy company, is headquartered in Richmond. (Ned Oliver/Virginia Mercury)
In a sharp pivot away from natural gas, Dominion Energy announced Sunday that it is canceling the controversial Atlantic Coast Pipeline and selling “substantially all” of its natural gas transmission and storage assets to a Berkshire Hathaway affiliate.
The decision follows six years of work developing the ACP, of which Dominion controls the majority share, numerous legal battles that invalidated key permits and the utility’s continued insistence on the critical role of natural gas in Virginia and North Carolina’s energy portfolios.
“The Atlantic Coast Pipeline is needed now more than ever for our region’s economy and our path to clean energy,” Dominion spokesperson Ann Nallo told the Mercury on June 19. “Communities across Hampton Roads, Virginia and eastern North Carolina are experiencing chronic shortages of natural gas.”
In a news release Sunday announcing the project’s cancellation, Dominion CEO, president and chairman Tom Farrell and Duke CEO, president and chair Lynn Good continued to describe the pipeline as “much-needed infrastructure” while attributing its demise to “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,” they concluded.
A major contributor to the cancellation identified by Dominion and Duke Sunday was a series of recent decisions in federal courts prohibiting the issuance of the Nationwide Permit 12, which developers of natural gas pipelines, among other large utility infrastructure, must obtain when their projects cross bodies of water or wetlands.
These “new and serious challenges,” said Dominion and Duke, coupled with ongoing delays related to other permits and rising costs “make the project too uncertain to justify investing more shareholder capital.”
Over the past six years the project’s cost has ballooned from an initial estimate of $4.5 to $5 billion to more than $8 billion.
Environmental groups and project opponents hailed the announcement Sunday even while voicing disbelief at the sudden decision, which came only weeks after the U.S. Supreme Court ruled in favor of the pipeline in a case over the project’s ability to cross beneath the Appalachian Trail.
“I think this proves what we always knew, which is that pipelines are a bad investment,” said Del. Sally Hudson, D-Charlottesville, whose district lies near the pipeline’s path.
Michael Town, executive director of the Virginia League of Conservation Voters, called the cancellation “a testament to the power of grassroots action, the hundreds of driven, determined, frontline advocates who never stopped fighting this misguided project.”
Several groups also struck a note of caution.
“While we welcome the Atlantic Coast Pipeline’s demise, this only marks the end to one symptom of the underlying structural problem of Virginia’s monopoly utilities — the problem itself remains,” said Brennan Gilmore, executive director of Clean Virginia, an advocacy group funded by Charlottesville millionaire Michael Bills that has fought Dominion’s influence in the state capital. “We must all remain vigilant and continue working towards the creation of a sensical utility system that prioritizes the public interest and prevents projects like the Atlantic Coast Pipeline from ever being proposed in the first place.”
In tandem with the Atlantic Coast announcement, Dominion also said it has agreed to sell “substantially all” of its natural gas transmission and storage assets to an affiliate of Berkshire Hathaway in a $9.7 billion deal in which Berkshire Hathaway will assume $5.7 billion of existing debt and pay Dominion $4 billion in cash.
Dominion characterized the move as a repositioning of the company toward a “focus on its premier state-regulated, sustainability-focused utilities.”
Farrell said in a company statement that the “narrowing of focus” would also increase long-term earnings growth expectations by about 30 percent.
Among the assets being sold are more than 7,700 miles of natural gas pipelines and about 900 billion cubic feet of gas storage, according to the company.
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