Investors should strongly consider permanently ditching a delayed and over budget pipeline that would carry fracked gas across three Southeastern states, according to a new report from a pair of climate groups.
“The Atlantic Coast Pipeline was always a bad idea. But now it’s clearer than ever that it is a failure.” —Lorne Stockman, Oil Change International
“The risks and growing costs of this major methane gas pipeline project look increasingly unwise to ratepayers, regulators, and investors alike,” warns the investor briefing (pdf).
The Atlantic Coast Pipeline (ACP) would carry fracked gas 600 miles from Appalachian Basin in West Virginia through Virginia to North Carolina. Dominion Energy, Duke Energy, and Southern Company make up Atlantic Coast Pipeline LLC, the company formed to construct and run the pipeline.
“The Atlantic Coast Pipeline is an environmental, climate, and human rights boondoggle,” said Donna Chavis, a campaigner with Friends of the Earth, which put out the briefing with Oil Change International on Monday, as Dominion investors were scheduled to meet.
“While news about the project’s challenges has mostly focused on the Forest Service permit and Appalachian Trail crossing, this report shows that the project’s problems do not stop there,” explained coauthor Lorne Stockman, a senior research analyst at Oil Change International.
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As the report outlines, the ACP is two years behind schedule and an estimated $2 billion over budget, and faces a “triple threat”:
extensive legal and regulatory challenges that are delaying construction and raising costs, which may lead to cancellation;
fundamental challenges to its financial viability in the face of lack of growth in domestic demand for methane gas and increased affordability of renewable energy options; and
an unprecedented citizen initiative positioned to ensure strict compliance with environmental laws and regulations, even in remote locations, if construction proceeds.
“The ACP is facing an onslaught of legal challenges and losses,” the report states. “Seven federal permits have been stayed, suspended, or vacated; in fact, all construction on the pipeline is currently stopped. When—or if—construction will start up again is unknown.”
Construction has been halted largely due to a series of lawsuits filed by environmental and Indigenous groups. The cases, many of which are ongoing, challenge permits and certificates from various agencies, including the Forest Service, National Park Service, and the Federal Energy Regulatory Commission (FERC).
Detailing ACP’s financial viability, the briefing points out that, “according to Dominion, the construction halt costs up to $20 million per week,” and just last month, Moody’s Investors Service said that “Dominion’s execution risk with its Atlantic Coast Pipeline is credit negative.” The report also acknowledges hesitance among state utility regulators to pass on costs to ratepayers.
In terms of the citizen initiative, as the briefing details:
“The Atlantic Coast Pipeline was always a bad idea. But now it’s clearer than ever that it is a failure,” concluded Stockman. “If Dominion and Duke don’t drop the project soon, investors can only expect more cost hikes and delays.”
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