No longer in the pipeline
The Atlantic Coast Pipeline is no longer in the pipeline.
After six years and billions of dollars spent, Virginia-based Dominion Energy and North Carolina-based Duke Energy canceled the project Sunday due to ongoing delays and uncertainty with the costs of the project that threatened its economic viability.
The project cost had already gone more than $3 billion over the original estimates of $4.5 billion to $5 billion, and would still not be online for at least another 18 months. The 600-mile natural gas pipeline was to run from West Virginia through Virginia into North Carolina.
It was announced in 2014 and originally was to be in service by late 2018.
“We regret that we will be unable to complete the Atlantic Coast Pipeline,” Thomas F. Farrell II, Dominion Energy chairman, president and chief executive officer, said in a statement. “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.”
Dominion Energy spokesman Aaron Ruby said Tuesday that the company would address a number of issues in the coming months as it winds down the project, including the work already done along with property acquisitions and any licensing agreements made with localities, including Suffolk. Ruby said he was unfamiliar with it, but that it would be part of the company’s review process in concluding work on the project.
“As part of that process, we will seek approval from (the Federal Energy Regulatory Commission) and other agencies to complete restoration for areas of the right of way that have been disturbed,” Ruby said. “We will also evaluate the best way forward for resolving existing easement agreements with landowners. They will of course keep any compensation they have received.”
The decision not to proceed with the pipeline comes despite a favorable ruling last month in the U.S. Supreme Court that allowed the project to cross through the Appalachian Trail. It also came on the same day Dominion Energy announced it planned to sell all of its gas transmission and storage segment assets to a Berkshire Hathaway affiliate in a $9.7 billion transaction.
“This announcement reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States,” Farrell said. “Until these issues are resolved, the ability to satisfy the country’s energy needs will be significantly challenged.”
Suffolk City Council in September 2018 approved a 40-year license agreement with Dominion Energy by a 5-0 vote, with three members — Vice Mayor Leroy Bennett and Councilmen Mike Duman and Tim Johnson — abstaining due to a conflict of interest. All three at the time said they owned stock in Dominion Energy.
That agreement centered on the permits and approvals Dominion Energy needed from the city to put one, 20-inch inside diameter natural gas pipeline anywhere it would have crossed the right-of-way. The company notified the city of Suffolk Sunday that it was ending the project.
“It sounds by all accounts the project is canceled and they’re walking away from it,” said Suffolk City Manager Patrick Roberts. “So the permits and everything remain valid, but it’s a moot point at this time.”
The license agreement dealt with issues that would arise if the company did not enter into a new agreement once it came to the end of its 40 years. It called for pipeline segments in the right-of-way to be filled with a flowable fill cement, and other parts of it to be removed entirely. Roberts said the city would have to review whether anything in that agreement would apply to the cancelation of the pipeline before it became operational.
About 33 miles of pipeline was expected to run through Suffolk, 26 miles in Southampton County and 11 in Chesapeake. Suffolk’s portion of the pipeline would have been the second longest in Virginia for the project, and fourth longest overall.
Roberts said the city has tried to stay out of the politics of the pipeline, noting the strong opposition by environmental groups and others who took issue with the project. He said the city felt, and continues to feel, that more natural gas is needed for industrial development.
“We’ve really tried to stay out of that discussion and be very clear from the beginning that the city’s interest in supporting this project was based on our desire to see increased natural gas capacity in support of industrial development,” Roberts said.
The gas infrastructure, Roberts said, has been modified a bit in the U.S. Route 58 corridor to extend natural gas and improve pressure, and there have been neighborhood-based projects in the downtown area to upgrade certain areas from low to intermediate pressure.
“We’ve seen some really positive steps in the right direction for natural gas for both residential and industrial development,” Roberts said. “We’ll continue to support that. Beyond this project, it remains something we’re interested in.”
In Southampton County, Board of Supervisors Chairman Dr. Alan Edwards was not happy about the news.
“This is a tragedy for us,” Edwards said. “We were counting on the income. That would have helped us out a lot. We’re very unhappy about it, but there’s nothing we can do about it.”
Edwards said money that would have come from having the pipeline in the county could have gone toward paying debt service and supporting the courthouse renovation project, and it could have kept the board from having to raise taxes to pay for the required renovations.
County Administrator Mike Johnson said the county would have stood to receive $750,000 to $800,000 from “pure revenue” — that is, no demands on the county’s part.
Virginia Chamber of Commerce President and Chief Executive Officer Barry DuVal said the project was expected to generate significant economic benefits in the three states where the pipeline was to go, including more than 17,000 jobs, $2.7 billion in economic activity and $4.2 million in average local tax revenue during construction.
Once operational, the pipeline was expected to generate $38 million in economic activity while supporting 1,300 jobs and generating $10.4 million in local tax revenue in 13 counties and cities along the route, DuVal said.
“Unfortunately, (the) announcement detrimentally impacts the Commonwealth’s access to affordable, reliable energy,” DuVal said in a statement. “It also demonstrates the significant regulatory burdens businesses must deal with in order to operate.”
Josh Holland, an agent for the Southampton County Extension Service, said he’s heard no reaction one way or another from the local agricultural community about the cancellation.
Jay Brenchick, president and chief executive officer of the Franklin-Southampton Economic Development Inc. said their business community was not going to be directly impacted by the pipeline.
“Therefore, with the pipeline being canceled,” Brenchick said, “our business community is not necessarily negatively impacted.”
The Nansemond Indian Nation had opposed the project due to what it said were the effects the pipeline would have on ancestral Nansemond territory, concerns about the risk to the Nansemond River and the passage of the pipeline through a Nansemond archaeological site.
In a Facebook post Sunday following Dominion Energy’s announcement, the tribe said “this is great news for Nansemond Indian Nation and our relatives throughout the region.”
Nikki Bass, a Nansemond Indian tribal council member, said Tuesday she was pleasantly surprised by Dominion Energy’s decision to cancel the project.
“I felt grateful because often you have a cause that you’re concerned about and speak out and try to take action, but you know inside that you may not win and you may not be able to protect what you’re trying to protect,” said Bass, stressing that she was speaking for herself and not on behalf of the tribal council. “When we learned this news, I felt like, ‘Wow, we have one victory.’ And it doesn’t mean that we don’t have to continue protecting the river, protecting our land, but at least we don’t have to worry about the pipeline coming through.”
Stephen H. Cowles of The Tidewater News contributed to this story.
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