One down, one to go?
We’ve had lots of shocking news lately, but it’s hard to find anything more shocking than the news that came out of Richmond on Sunday afternoon: Dominion Energy and its partners have cancelled the proposed Atlantic Coast Pipeline, which would have piped natural gas from West Virginia, through Virginia, and onto North Carolina.
The news was especially unexpected because less than three weeks ago the project had won a major legal victory when the U.S. Supreme Court ruled it had the right to pass under the Appalachian Trail. When that 7-2 ruling came down on June 15, it seemed like “all systems go” for the ACP. Now the project is dead, with the CEOs of Dominion and Duke Energy saying it’s too hard to get regulatory approval — even with that favorable court ruling.
The abrupt cancellation of the ACP raises lots of questions, especially for those interested in the fate of the Mountain Valley Pipeline.
1. Does this make it more likely that the MVP will be completed? Just last month a Dominion spokeswoman told the Virginia Mercury: “Communities across Hampton Roads, Virginia and eastern North Carolina are experiencing chronic shortages of natural gas.” The MVP would serve different customers but one less potential supplier in the overall marketplace would seem to make the MVP even stronger.
2. Or does this make it less likely that the MVP will be completed? The same regulatory hurdles that blocked Dominion are there for the MVP, as well. One of its biggest obstacles right now is a court ruling — not out of Virginia, but out of Montana. In May, U.S. District Court Judge Brian Morris blocked a streamlined permitting process the U.S. Army Corps of Engineers wanted to use for when pipelines need to cross bodies of water. The case deals with Keystone XL Pipeline, but his ruling effectively shuts down pipeline projects nationwide until “completion of the consultation process and compliance with all environmental statutes and regulations” — a process that could take months.
Time is of the essence for the MVP for lots of reasons. First, any delay drives up the cost. If corporate behemoths such as Dominion and Duke couldn’t stomach the rising costs of the ACP, how will a smaller company such as the one behind the MVP handle the extra expense? Originally estimated to cost $3.7 billion, the MVP’s pricetag is now put at $5.7 billion. Second, the clock is ticking. Bloomberg News Service reports that the MVP’s “time may be running out after two customers in May amended a 2016 agreement to terminate the deal if service doesn’t begin by the end of 2021.” Third, there’s a presidential election coming. If pipeline projects can’t be completed under the Trump administration — with its pro-fossil fuel policies — what will happen if there’s a Biden administration in 2021? Biden’s views on natural gas are murky, at best. Like many Democrats, he’s embraced a call for 100% clean energy by 2050 but he’s also said that he won’t eliminate natural gas drilling on private lands. “No, I would not shut down this industry,” he told Pittsburgh TV station KDKA in April. Environmentalists wish he would, but Biden knows he may need to carry Pennsylvania to win — and natural gas has become big business there. In any case, it’s a fair bet that any Biden appointees would not be as gung-ho for natural gas pipelines as Trump appointees are. That raises this question:
3. How will markets react to this cancellation? Bloomberg quotes one corporate consultant: “Investors have lost patience with big infrastructure projects, and the 2020 election poses too much risk for major projects to move forward.” How will the investors behind the MVP react? The stock price for the main company behind the MVP has steadily declined since the project was announced in 2014. Equitrans was trading at $22.32 on Nov. 30, 2018. By March 18, 2020, shares had fallen to $4.08, but have rebounded some since. On Monday, shares opened at $9 and closed at $8.91. The one thing the MVP has going for it is that it’s nearly done. The company says it has 92% of the pipe in the ground; opponents don’t think it’s that much — but whatever the percentage, there’s clearly a lot of pipeline built. Dominion saw no immediate payoff for the unbuilt ACP; investors might think the MVP is a better bet. Or not.
4. What will this do for energy prices? This, like the markets, will take time to play out. House Minority Leader Todd Gilbert, R-Shenandoah County, took to Twitter to warn that the ACP’s cancellation will drive up energy prices: “Don’t ever again let a Virginia Democrat tell you they want you to have cheap and reliable sources of energy. Don’t ever again believe them when they purport to care about those least able to pay for their energy policies. Never again.” Green energy proponents say just the opposite — that ultimately renewables will be cheaper than fossil fuels, and point to how the price of renewables is consistently coming down. This is a question that may have different answers in different years as the energy market changes.
5. Who deserves the credit — or blame — for the ACP’s cancellation? Trump’s Energy Secretary, Dan Brouillette, blamed “the well-funded, obstructionist environmental lobby.” You might disagree with his adjectives, but he’s basically right. The ACP wasn’t stopped by silly stunts or people sitting in trees. It was stopped by lawyers who gummed up the regulatory gears with lawsuits that found a sympathetic ear before certain judges. That’s a clear lesson for MVP opponents: If your protest isn’t raising money to pay for lawyers, it’s probably not doing any good.
6. How will that “well-funded” environmental lobby react? In the past, a lot of the big contributors have focused on the Atlantic Coast Pipeline because it would have gone near trendy Charlottesville — and ignored the pipeline actually being built through not-so-trendy Southwest Virginia. Now that they’ve won, will they start helping pay the lawyers fighting the MVP, or will they move on to other causes?
7. What will this do for former Gov. Terry McAuliffe’s comeback bid? He riled many Democrats when he was governor by enthusiastically backing natural gas pipelines. With the ACP (but not the MVP) out of the picture, will that opposition diminish? Or will the cancellation stand as evidence that McAuliffe was wrong all along?
Seven questions, for which none of us have any answers yet.
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