To be an energy superpower, America’s oil and gas require a suitably gigantic pipeline network that spans millions of miles. The country’s ability to expand that infrastructure is being tested like never before.
In what is arguably the biggest victory for an environmental movement targeting fossil fuel pipelines, Dominion Energy Inc. and its partner Duke Energy Corp. said Sunday they will no longer pursue their natural gas pipeline off the US Atlantic coast. $ 8 billion after years of delays. and balloon costs.
It is the third project this year to be shelved or canceled entirely amid mounting opposition to the development of coal, oil and gas. Armed with experienced attorneys and record funds, environmental groups are finding enormous success in blocking key pipeline permits in court. The move to keep it on the ground has paid increasing attention to pipes, rather than wells, because they require various federal and state permits, which, for the most part, can be more easily litigated.
Climate activists protest against the Atlantic Coast pipeline in front of the United States Supreme Court in February.
The lack of new pipelines in areas like the Northeast U.S., which faces gas supply constraints, may hamper some producers and speed up the pace of transition to renewable energy. The disappearance of the Atlantic Coast also casts a dark cloud on the Mountain Valley Pipeline, a $ 4.7 billion gas project that EQM Midstream Partners is developing alongside utility giants NextEra Corp., Consolidated Edison Inc., and others.
The pipeline industry challenges come despite the support of President Donald Trump. In his first week in office, Trump gave the green light to the Keystone XL and Dakota Access pipelines. Last year, the White House signed an executive order directed at short-circuit regulators who delayed gas lines by denying permits. But the move so far has failed to salvage any major projects, and Keystone XL and Dakota Access remain in trouble. In February Williams Cos dumped his natural gas pipeline from the Constitution after failing to obtain a New York water permit repeatedly. Just three months later, the company said it would not resubmit a state request for another gas pipeline routed through the state.
Unlike Trump, presumptive Democratic presidential candidate Joe Biden has promised to kill Keystone XL and is supporting a push for low-carbon energy sources, even at the cost of oil and gas jobs.
“Investors have lost patience with big infrastructure projects, and the 2020 elections pose too much risk for big projects to move forward,” said Katie Bays, co-founder of Washington-based Sandhill Strategy LLC.
When the Atlantic Coast was proposed in 2014, it was expected to cost $ 5 billion and connect Appalachian shale gas sets to the southeast markets. The price rose to US $ 8 billion, since the date of the pipeline to enter the service was delayed again and again. The project faced opposition at various points along its route, including the proposed site of an associated plant in Union Hill, a community west of Richmond, Virginia, which was founded by freed slaves after the Civil War. Former US Vice President and fossil fuel critic Al Gore said last year that the pipeline represented “environmental racism.”
The project obtained a favorable ruling from the Supreme Court in June, but a long list of other obstacles remained. In the end, Dominion not only canceled it, the company also announced Sunday the sale of almost its entire pipeline and storage business to Warren Buffett’s Berkshire Hathaway for $ 4 billion, while highlighting its net carbon emissions target. zero by 2050.
“The well-funded obstructionist environmental lobby has successfully killed the pipeline off the Atlantic coast,” US Energy Secretary Dan Brouillette said in a statement. “Duke and Dominion have had to make the difficult decision to terminate this project because it is no longer economically viable due to the costly legal battles they would continue to face.”
The Natural Resources Defense Council was one of the environmental groups that praised the decision. The organization said the project threatened the waterways and that its cancellation marks a victory for owners along the proposed route.
Gas pipelines running through state lines have generally required more extensive environmental reviews than pipelines, which in turn makes them more vulnerable to legal challenges and permitting issues. But even raw lines are increasingly encountering major obstacles. The Keystone XL oil project remains stagnant after more than a decade, while Enbridge Inc.’s Line 3 and Line 5 pipelines remain caught up in court battles and regulatory rollback. Although Dakota Access already transports oil, operations could be halted if a legal challenge succeeds.
Even in Texas, long considered a safe haven for the oil and gas industry, the Kinder Morgan Inc. Permian Highway pipeline is experiencing a backlash from landowners and conservationists who argue that the project would harm areas of aquifer recharge.
“We have to be honest with ourselves that a world where ACP is too risky to do it is probably also a world where KXL is too risky to do it,” said Bays, who uses acronyms for the Atlantic Coast and Keystone XL. “We will see companies turn to smaller strategic investments and away from the large interstate oil and gas pipelines.”
The Supreme Court victory for the Atlantic coast provided a ray of hope for Mountain Valley, which has also seen delays and cost increases as it also seeks to get Appalachian gas out of the Marcellus shale field. But the time may run out after two customers in May amended a 2016 deal to end the deal if service doesn’t start in late 2021.
Christi Tezak, managing director of ClearView Energy Partners, said she still expects Mountain Valley to cross the finish line, in part because the project is primarily built and facing slightly different circumstances than on the Atlantic coast.
“Is it the most challenging landscape? Absolutely. But for the projects that are at stake at the moment, there are situational characteristics that make them different, ”she said. “I would say what we are seeing is the end of a cyclical boom in energy infrastructure, combined with a trend towards less greenhouse gas-intensive power generation.”
Bloomberg.com
