Pipeline hits new setbacks
BY LINDELL JOHN KAY
Monday, February 18, 2019
A planned interstate natural gas pipeline through Nash County may have run its course before any fuel has flowed.
In a case of bad news coming in threes, the Atlantic Coast Pipeline recently has been downgraded as an investment, taken the brunt of a scathing environmental report and got trounced in a federal lawsuit by a local farmer.
The now-struggling 600-mile pipeline project would carry natural gas from a fracking site in West Virginia to North Carolina.
Moody’s Investors Service has changed its rating of the pipeline project to credit negative due to the project's latest increases in costs and delays in construction.
“As cost estimates continue to rise and as the completion date is pushed further out, Dominion’s path for financial improvement is starting to look more uncertain,” said Moody’s Vice President Ryan Wobbrock.
When investors begin to sour on big construction projects, the collapse comes into view, said Jim Warren, executive director of N.C. Warn, a Durham-based environmental watchdog group.
"This project is $3 billion over budget yet construction had barely begun when it’s been halted for many months," Warren said. "My guess: 30 percent chance it’ll ever be completed."
Emails to a pipeline spokesman weren't returned by presstime.
A late-January report titled "The Vanishing Need for the Atlantic Coast Pipeline" contends that diminishing consumer demand and more affordable renewables have cast doubt on the overall feasibility and profitability of the pipeline.
There's a growing risk that the pipeline won't be able to recover costs from rate-paying customers, according to the report released by the pro-environmentalist Institute for Energy Economics and Financial Analysis and Oil Change International
“The demand outlook for gas has changed dramatically since the project’s inception and much of the original justification for the pipeline has evaporated,” said Cathy Kunkel, IEEFA energy analyst and co-author of the report.
The pipeline — a joint venture of energy companies Duke Energy and Dominion — was by approved in October 2017 by the Federal Energy Regulatory Commission.
Originally believed to cost $5.1 billion, projections have been raised by about 30 percent to $6.5 billion to $7 billion, excluding financing costs, according to the report.
Key findings in the report include:
■ Four out of five of Dominion’s modeled scenarios show no increase in natural gas consumption from 2019 through 2033.
■ The most recent information from Duke shows that previously planned natural gas plants have been delayed further into the future.
■ Renewable energy and storage technologies will decline in price over the next decade.
Local small farmer turned environmentalist and property rights advocate Marvin Winstead stood up to his personal Goliath and won. Pipeline developers were halted in November from access to Winstead's Nash County farm for at least 90 days by a ruling from Chief Judge Terrence Boyle of the U.S. Court for the Eastern District of North Carolina.
Boyle — a President Ronald Reagan appointee — said his decision was due in part because the future of the pipeline remains uncertain.
"The outcome of one or more of the challenges could cause or require the currently permitted pipeline route to be reexamined, potentially obviating any need to secure an easement on Winstead's property," Boyle ruled.
Winstead said Saturday that the eminent domain case is in limbo because pipeline attorneys withdrew their case about a week ago.
"I am told by my attorney that they can refile anytime within a year of the withdrawal of their motions before the court," Marvin said.
For now, the judge ruled the pipeline wouldn't be able to force an easement on Winstead's farm because it would require cutting down a historic tree on the property. If the pipeline moves forward, it will have to go around Winstead's farm.
"I think the companies should see the truth about this awful plan and switch to renewable energy sources that will benefit everyone," Winstead said.