Atlantic Coast Pipeline Delayed Amid Increasing Costs Caused by Permit Delays
Published: February 11, 2019 |
The completion of the Atlantic Coast Pipeline has been delayed amid a projected cost increase to more than $7 billion, about $2 billion to $3 billion more than initial projections.
In a separate development, two research organizations released a report questioning the viability of the project. The report released Jan. 29 by the Institute for Energy Economics and Financial Analysis and Oil Change International said lower consumer demand for natural gas and the availability of affordable renewable options were casting doubt on the overall feasibility and potential profitability of the pipeline.
The pipeline project has been delayed until late next year with the pipeline not expected to be in full service until 2021, according to a statement released Friday by the company working on the pipeline.
Atlantic Coast Pipeline LLC, which was formed by Dominion Energy, Duke Energy and Southern Company Gas, is building the pipeline.
The 600-mile pipeline is expected to run from West Virginia, through Virginia and into North Carolina, where it would end near Pembroke. The proposed route of the 36-inch pipeline runs through the northwest corner of Sampson County and near Godwin, Wade, Eastover, Cedar Creek and Gray’s Creek in Cumberland County, and St. Pauls in Robeson County.
The project has faced opposition from residents and environmental groups who say they are worried about potential dangers and have called for more reliance on renewable energy such as solar and wind power.
Supporters of the pipeline say the project will provide a safe, clean source of power that will lower the cost of energy and help economic development.
Some work on the pipeline was suspended last year over questions related to a national permit. Residents and environmental groups have filed lawsuits in an effort to stop the project.
Thomas F. Farrell II, the chairman, president and chief executive officer of Dominion Energy, said in the statement released Friday that the company is confident that all permit issues will be resolved.
“We are actively pursuing multiple paths to resolve all outstanding permit issues including judicial, legislative, and administrative avenues,” he said.
The statement said the company expects that construction could restart in July, August or September. The pipeline was initially expected to be in service this year.
The company now expects the project cost to be between $7.0 billion and $7.5 billion, excluding financing costs, the statement said. When the project was first announced cost estimates were $4.5 billion to $5 billion.
Karl R. Neddenien, a Dominion Energy spokesman, said the cost increases are due to schedule delays.
“Our customers critically need this project to heat and electrify their homes, businesses and industries, assist in the transition away from coal-fired power generation, support economic and renewable energy development and reduce reliance on a single source of gas delivery,” he said. “Our customers, state regulator commissions and the Federal Energy Regulatory Agency all have attested independently to the critical need for this project.”
Neddenien said the savings that are expected to come from the pipeline’s “low-cost gas” will more than offset the additional project costs. He said the cost is not the only reason the pipeline is needed.
“Having an additional and diversified supply of natural gas is critical, given that utilities are forced to turn away new customers due to the lack of infrastructure,” he said.
The report questioning the pipeline’s viability says the increased cost is one of the project’s challenges. It says the pipeline’s owners will have to recover the cost through rate increases that will have to be approved by regulators in North Carolina and Virginia.
The report also says projections of the need for the natural gas to be carried by the pipeline might be overstated.
“Over the next decade, it is likely that the demand for natural gas in Virginia and North Carolina will be further eroded as renewable energy and storage technologies continue to rapidly decline in price,” the report said.
Source: The Fayetteville Observer
To stop by Atlantic Coast’s website, CLICK HERE
Be in-the-know when you’re on-the-go!
FREE eNews delivery service to your email twice-weekly. With a focus on lead-driven news, our news service will help you develop new business contacts on an on-going basis.
CLICK HERE to register your email address.