Dominion Energy’s 600-mile Atlantic Coast Pipeline, planned to run from West Virginia, through the heart of Virginia and into North Carolina, has seen its costs balloon by another $1 billion and won’t be fully in service until 2021, the company says.
And some analysts are questioning whether it will get built at all.
Utility Dive, an industry publication, citing an earnings call with Dominion CEO Tom Farrell, reported that the delay “is a sign that opponents’ environmental and legal challenges to gas pipelines are having an impact on project timelines and company bottom lines.”
The company now projects the pipeline will cost “between $7 and $7.5 billion, excluding financing costs,” with the cost of the related Supply Header project pegged at $650 to $700 million.
Numerous court challenges have left the project missing major permits, with the most important perhaps being permission to cross the Appalachian National Scenic Trail, a crucial approval.
Analysts for investment management company Sanford C. Bernstein & Co. LLC told clients Jan. 24 that the rising costs of the Atlantic Coast Pipeline and separate Mountain Valley Pipeline, which is planned to run through Southwest Virginia, could make them uncompetitive by forcing operators to charge too much.
“We had anticipated that building through [North Carolina and Virginia] would be difficult,” Bernstein’s midstream analyst Jean Ann Salisbury said in a research note. “The perfect combo of no major recent new pipelines and no state upstream benefit usually leads to problems —just ask [Williams Cos. Inc.’s Constitution Pipeline Co. LLC].”
Farrell, however, remains an optimist.
“We remain highly confident in the successful and timely resolution of all outstanding permit issues as well as the ultimate completion of the entire project. We are actively pursuing multiple paths to resolve all outstanding permit issues including judicial, legislative, and administrative avenues,” he said.
The project’s need has come under serious scrutiny, with virtually all of the gas capacity purchased by subsidiaries of the energy companies who stand to profit from the project.