Two giant energy relinquish a pipeline is controversial

Deux géants énergétiques renoncent à un gazoduc controversé

Two american giants of the energy, which planned to build a gas pipeline through the mountain chain, Appalachian, Duke Energy, and Dominion Energy, announced Sunday, to have abandoned the controversial project.

Dominion Energy has, at the same time, expressed its intention to sell its assets in the transportation and storage of natural gas in the company of american businessman Warren Buffett for $ 9.7 billion.

The company, in partnership with Duke Energy, announced, in 2014, its intention to build the pipeline, Atlantic Coast Pipeline.

But “the delays and increased uncertainty about the costs (…) threaten the economic viability of the project”, say the two companies in a joint press release.

The pipeline, which would pass through the mountain chain of the Appalachian mountains, was in particular attracted criticism and prosecution of organizations for the protection of the environment.

The supreme Court ruled, in June, in favour of the two companies.

Another trial, however, is ongoing and contributes, among other factors, “to make the project too uncertain to justify investing even more money for our shareholders”, say, Duke Energy and Dominion Energy.

Because of legal problems, the expected cost of the project increased from 4.5 or $ 5 billion to $ 8 billion, say they.

If it was completed, the project is expected, moreover, to enter service beginning in 2022, which would represent a delay of three and a half years compared to the initial projections.

The decision to abandon this pipeline, “reflects the increasing legal uncertainty, which overlooks the development of energy infrastructure and large-scale industrial in the United States”, said the bosses of the two companies, as cited in the press release.

In addition to the abandonment of this project, Dominion Energy intends to divest itself of 7700 miles (12 400 miles) of pipeline, as well as 25.5 billion cubic meters of storage of natural gas by the transferor to the company of Mr. Buffett, Berkshire Hattaway.

The transaction also includes the sale of 25% of the terminal in Cove Point, Maryland, on the east coast of the United States, which exported natural gas to foreign countries.

Berkshire Hattaway, who already manages more than$ 100 billion of assets in the energy sector, will pay$ 4 billion in cash to the Dominion and resume to$ 5.7 b in debt.

This is the first big acquisition of the company, Mr Buffett, known for his participation in large companies in difficult times, since the beginning of the pandemic and the economic crisis that has resulted.

Share Button