July 31, 2020 / 1:08 PM / 15 days ago

Dominion takes $2.8 bln charge to exit Atlantic Coast natgas pipe

(Reuters) - U.S. energy company Dominion Energy Inc said on Friday it took a $2.8 billion charge in the second quarter related to the cancellation of the Atlantic Coast natural gas pipeline from West Virginia to North Carolina.

Atlantic Coast was the most expensive U.S. gas pipeline under construction when Dominion and partner Duke Energy Corp exited the $8 billion project earlier this month due to regulatory uncertainty following years of delays and billions of dollars of cost overruns.

It is just one of several U.S. oil and gas pipelines mired in legal and regulatory battles with local and environmental groups that have found numerous problems with U.S. permits issued by Trump administration agencies.

When Dominion started work on the 600-mile (966-km) pipe in 2018, the company estimated it would cost $6.0 billion to $6.5 billion and be completed in late 2019.

In the weeks before canceling the project, however, Dominion said it could finish the project in early 2022 only if it received new federal permits soon that would survive court challenges.

In addition to regulatory delays, Atlantic Coast was also hurt by a short-term hit to gas demand from the coronavirus and a longer-term hit from growing consumer interest in clean energy projects.

Still, there was a need for the pipeline and that will now be left unmet, Chief Financial Officer James R. Chapman said on a post-earnings call.

Virginia is one of several states seeking to achieve 100% carbon-free power over the next two decades.

Even though gas is the cleanest fossil fuel and considered by many analysts to provide a bridge from dirty coal to clean renewables, it still produces carbon.

Dominion has plans to invest up to $55 billion over the next 15 years on zero-carbon generation, energy storage, gas distribution replacement and renewable natural gas.

Reporting By Scott DiSavino; Editing by Nick Zieminski, Jonathan Oatis and Shinjini Ganguli

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