Dominion kills pipeline, sells assets

Bloomberg

One of the largest utilities in America is starting to turn its back on natural gas.
Dominion Energy Inc, the second-biggest US power company by market value, said it’s selling substantially all of its gas pipeline and storage assets to Berkshire Hathaway Inc for $4 billion. In a separate statement,
Dominion and its partner Duke Energy Corp said they’re killing the controversial Atlantic Coast gas pipeline along the US East Coast, citing ongoing delays and “cost uncertainty.”
The moves come as utilities face increasing pressure from local governments, investors and environmentalists to quit the fossil fuel.
While long heralded as a cleaner alternative to coal and heating oil, gas is now getting shoved aside in the fight against climate change as states including New York, California and Dominion’s home base of Virginia have all passed laws for utilities to be carbon free within decades.
“This transaction represents another significant step in our evolution as a company,” Dominion Chief Executive Officer Thomas Farrell said in a statement, citing the company’s goal of reaching net-zero emissions by 2050.
The push away from gas positions Dominion as more of a pure-play state-regulated utility at a time when oil and pipeline operators have lagged the broader market. In the last year, an index of pipeline companies has fallen 36%, while the S&P 500 Index has gained 4.7%.
To be clear, Richmond, Virginia-based Dominion, which provides power and gas to 7 million customers in 20 states, isn’t walking away from fossil fuel altogether.
It will still sell gas to customers for heating and cooking. It’s retaining an interest in its Cove Point liquefied natural gas export terminal in Maryland.
And 40% of the electricity the company generates comes from plants fuelled by gas, coal and oil, according to its website.
“They’ll still be burning lots of gas for decades ahead in the core utility business,” Bloomberg Intelligence analyst Kit Konolige said in an email.
But pressure is mounting. The law Virginia enacted in April requires Dominion’s utility in the state to be to be carbon-free by 2045.
Atlantic Coast is the third US gas pipeline project to scrapped or shelved this year. Williams Cos opted not to reapply for a permit in May for a $1 billion pipeline extension after regulators in New York blocked it. And in February the Oklahoma-based company canceled plans for a pipeline that would have run from Appalachia to New York.
While the Atlantic Coast pipeline project won a key victory last month when the US Supreme Court sided against environmentalists and upheld a crucial permit, the project still faced formidable opposition and costs.
“That would indicate that that wasn’t a strategic decision as much it was as a practical decision,” said Paul Patterson, an analyst at Glenrock Associates LLC.