DOMINION CANCELING GAS PIPELINE
The company is shelving plans for a project in order to focus on electric and gas utilities
Dominion Energy is pulling the plug on its controversial plan to build a natural gas pipeline crossing Virginia.
The decision comes in tandem with a major strategic shift out of the energy giant’s multi-billiondollar investment in a gas transmission business with operations as far away as Wyoming.
Dominion wants to focus on its regulated electric and natural gas utilities and its push to net-zero carbon emissions, chairman and chief executive officer Thomas Farrell said Sunday, announcing the $9.7 billion sale of the company’s gas pipeline operations to Warren Buffett’s Berkshire Hathaway investment company.
Describing the deal as a “narrowing of focus,” Farrell said it is “another significant step in our evolution as a company, allowing us to focus even more on fulfilling utility customer needs and positioning us for a bright and increasingly sustainable future.”
Meanwhile, the decision to cancel the Atlantic Coast Pipeline project comes less than three weeks after the U.S. Supreme Court rejected arguments that it should not be allowed to cross the Appalachian Trail.
But a Montana court challenge to another controversial pipeline project — the Keystone pipeline — calls into question permits the U.S. Army Corps of Engineers has issued allowing pipelines in the United States, including the Atlantic Coast Pipeline, to cross waterways and wetlands, Dominion and its partner in the pipeline project, Duke Energy, decided.
That creates too much uncer
tainty for a project already running billions of dollars over initial cost estimates and means delays in the tree clearing work slated for the winter in order to keep the project from falling further behind schedule, Dominion and Duke said in a joint statement.
They’ve already spent $3.4 billion in a more than 5-year-old effort to build the 600-mile link between gas fields in West Virginia and big markets for gas in Hampton Roads, central Virginia and North Carolina. Dominion’s share of that expense, 53%, is the same as its ownership stake in the project
None of that cost has fallen on Dominion’s rate payers and none will, Dominion officials say. The project has not been included in assets the State Corporation Commission says Dominion can use as the basis for calculating utility customers’ rates.
Environmentalists have challenged the pipeline as a costly commitment to fossil fuel — shale gas — that creates major pollution issues. Extraction involves chemicals that taint groundwater while using gas to heat homes and businesses or to generate electricity accelerates climate change, they say.
Despite its decision to cancel the Atlantic Coast pipeline, Dominion says Virginia still needs gas — more than anyone can currently deliver.
But Dominion officials say the problem of gas supply in Virginia will be somebody else’s headache. Dominion wanted to use 20% of the gas to be shipped through the line as an alternative supply to its two giant gas-fired generating stations in Greensville and Brunswick counties, which are currently dependent on a line that connects the state to the gas fields of Louisiana and Texas.
It can be hard to secure space on that line, with the result that the price Dominion pays for gas — and passes on to customers — can soar.
Virginia Natural Gas, which serves more than 300,000 customers in southeastern Virginia, and Columbia Natural Gas, which has more than 265,000 customers, including some in Hampton Roads, had signed 20-year commitments for gas to be shipped through the Atlantic Coast Pipeline.
The gas companies have been concerned for years about gas supplies — some large industrial and military customers in Hampton Roads have had gas supplies interrupted on the coldest winter days in the past half dozen years because there’s not been enough gas to go around. Those big customers get a price break for agreeing to allow their supplies to be cut.
Restoring rights of way where Dominion has been clearing trees and resolving pending disputes with some landowners along the route will be the work of the next several months. Dominion officials do not expect to ask landowners to return compensation payments already made for use of their property.
Opponents of the project said its abandonment was a major victory.
“The costly and unneeded
Atlantic Coast pipeline would have threatened waterways and communities across its 600-mile path,” said Gillian Giannetti, an attorney with the Natural Resources Defense Council.
Brendon Gilmore, executive director of Clean Virginia, a clean energy advocacy group, said the pipeline push had been a clear sign Dominion put its financial health above the health of Virginians.
“This pipeline was a boondoggle from the moment it was announced by Dominion CEO Tom Farrell and then-Virginia Governor Terry McAuliffe in September 2014, said Mike Tidwell, executive director of the Chesapeake Climate Action Network.
The sale of Dominion’s national wholesale gas business, meanwhile, involves 7,700 miles of pipelines and 900 billion cubic feet of gas storage facilities. These are located in several Appalachian and Rocky Mountain states, including a small operation in Northern Virginia, and basically involve pipelines linking wells with major interstate routes, storage facilities and processing plants.
Dominion will receive $4 billion in cash and will transfer some $5.7 billion of debt to Berkshire Hathaway.
It plans to use the cash to buy back some of its shares.
Dominion officials say the debt transfer will make it easier to finance the $55 billion it expects to spend on efforts over the next 15 years to cut carbon emissions from its electric utilities in Virginia and South Carolina and its gas utilities in Ohio, South Carolina, Utah and West Virginia — an effort that includes multi-billion dollar investments in offshore wind, solar energy farms and battery storage in Virginia.
Dominion wants to focus on its regulated electric and natural gas utilities and its push to net-zero carbon emissions, chairman and chief executive officer Thomas Farrell said Sunday, announcing the $9.7 billion sale of the company’s gas pipeline operations to Warren Buffett’s Berkshire Hathaway investment company.