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The Atlantic Coast Gas Pipeline Project In The United States Has Closed

The Atlantic Coast Gas Pipeline Project In The United States Has Closed

American Duke Energy Corp. and Dominion Energy (SPB:D) Inc. announced the closure of the $8 billion Atlantic Coast Pipeline (ACP) project, citing ongoing regulatory delays and legal uncertainty.

The project provided for the construction of a gas pipeline with a length of about 965 kilometers, which would pass through West Virginia, Virginia and North Carolina, including under the Appalachian trail (a famous Hiking route in the Appalachian mountain system, which runs from Georgia to Maine).

"The decision is due to the growing legal uncertainty that hangs over large - scale energy and industrial infrastructure development projects in the United States," Duke and Dominion said in a joint press release. "Until this problem is resolved, the country's capacity to meet its energy needs will be significantly limited."

Dominion also announced on Sunday the sale of gas distribution assets and a network of gas storage facilities to the investment company of American billionaire Warren Buffett for $9.7 billion, including $5.7 billion in debt.

Pipeline projects that emerged amid the growth of oil and gas production due to the shale revolution have faced serious opposition, both from landowners and native Americans, and environmental activists who oppose the extraction of fossil fuels writes the Wall Street Journal.

For example, the Keystone XL pipeline project, which is supposed to link oil fields in the Canadian province of Alberta with refineries in the United States on the Gulf coast, is still not built 11 years after it was submitted by TC Energy Corp. The Energy Transfer (SPB: ET) LP project - the Dakota Access oil pipeline running from the Bakken shale field in North Dakota to Illinois - was completed in 2017 after years of delays amid protests and lawsuits.

Dominion and Duke announced plans for the construction of the ACP in 2014. The project caused many complaints from environmentalists and indigenous peoples, which led to legal proceedings. So far, companies have invested a total of $3.4 billion in building ACP.

Last month, they won an important victory when the Supreme court ruled that the pipeline could pass through the Appalachian Trail. However, Duke and Dominion said on Sunday that the court decision is not enough to reduce the "unacceptable layer of uncertainty and expected delays" of the project.

Both Duke and Dominion operate in the field of electricity and gas supply. Duke serves more than 9 million customers in North and South Carolina, the Midwest, Florida, and Tennessee, and Dominion serves about 7 million customers in 20 us States.

Dominion will almost completely exit the gas distribution business after a deal with Berkshire Hathaway (SPB: BRK.B) Energy. The deal includes the sale of a 25% stake in the Cove Point LNG export terminal in Maryland, Dominion said in a press release. The company will retain 50% in the project, another 25% of which is owned by Brookfield Asset Management.

Berkshire Hathaway Energy manages a portfolio of assets with a total value of $100 billion, including in the field of electricity and gas supply, where it serves more than 12 million customers. As part of the deal with Dominion, the company will receive 12.4 thousand kilometers of gas pipelines and gas storage facilities with a capacity of about 900 billion cubic feet, Berkshire said.

The parties expect to close the deal in the fourth quarter of this year.