NEW YORK: Duke Energy and Dominion Energy announced on Sunday they had dropped plans to build a controversial natural gas pipeline through mountains in the eastern United States.
Dominion Energy also announced it intends to sell its natural gas transmission and storage assets to American businessman Warren Buffet's holding company for US$9.7 billion (RM41.5 billion).
Duke Energy and Dominion Energy announced in 2014 plans to build the Atlantic Coast Pipeline that was intended to provide natural gas supplies to growing markets in Virginia and North Carolina.
But "ongoing delays and increasing cost uncertainty... threaten the economic viability of the project," the two companies said in a joint statement.
The pipeline, which would have crossed the Appalachian Mountain range, had attracted criticism and lawsuits from environmental protection organisations. But the US Supreme Court had ruled in favour of the energy titans in June.
However, another ongoing lawsuit has contributed, among other factors, to "make the project too uncertain to justify investing more shareholder capital," the companies said in the statement.
Due to the legal issues, the project's anticipated cost as increased from US$4.5 or US$5 billion to US$8 billion (RM34.2 billion), they said.
Furthermore, if the pipeline were completed, it was expected to be operational in early 2022, three and a half years later than originally projected.
The decision to halt construction "reflects the increasing legal uncertainty that overhangs large-scale energy and industrial infrastructure development in the United States," the chief executives of both Duke and Dominion Energy said in the statement.
In addition to dropping the project, Dominion Energy intends to sell 12,400km (7,700 miles) of pipeline as well as 25.5 billion cubic metres of natural gas storage space to Buffett's holding company, Berkshire Hathaway.
The deal also includes the transfer of 25% of the Cove Point terminal in Maryland, on the US East Coast, from where natural gas is exported abroad.
Berkshire Hathaway, which already manages more than US$100 billion in assets in the energy sector, will pay Dominion Energy US$4 billion in cash and take over US$5.7 billion in debt.
This is the first major acquisition for Buffett's holding company – known for its equity investments in large companies at difficult times – since the start of the coronavirus pandemic and the ensuing economic crisis. – AFP
source https://www.thesundaily.my/business/dominion-duke-drop-us-8b-natural-gas-pipeline-project-JE2699308
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