Dominion's (D) Atlantic Coast Pipeline Faces Another Setback

The cloud of uncertainty hovering over Dominion Energy Inc. 's D Atlantic Coast pipeline does not seem to dissolve soon. The project recently hit another speed bump after the Fourth U.S. Circuit Court of Appeals halted the major interstate natural gas pipeline on grounds that it may impact vulnerable species. As a consequence, the construction of the pipeline has been stalled for the time being.

The $5-Billion Atlantic Coast Pipeline

The project is a joint venture between Dominion Energy, Duke Energy Corporation DUK , Piedmont Natural Gas Company and Southern Company SO , with Dominion Energy being the majority stakeholder and chief operator of the pipeline.

The 600-mile Atlantic Coast Pipeline is intended to transport gas from Marcellus and Utica shales to West Virginia, Virginia and eastern North Carolina. Evolving technologies like horizontal drilling and hydraulic fracturing or fracking have led to a boom in natural gas production in the Marcellus and Utica shale fields in West Virginia, Ohio and Pennsylvania. The pipeline is likely to transport around 1.5 billion cubic feet of natural gas per day to North Carolina and Virginia.

The Atlantic Coast Pipeline project will not only contribute to lower greenhouse gas and other emissions, but also lead to the creation of jobs as well as revenues for state and local governments throughout North Carolina, Virginia, and West Virginia.

Challenges Galore: Environmental Safety at the Crux

Making good on his campaign promises to rev up infrastructure spending, President Trump signed an executive order in January 2017 for accelerating the environment review process and approvals for the Atlantic Coast Pipeline. While the Federal Energy Regulatory Commission (FERC) green lighted the pipeline project in November 2017, it has been facing constant opposition on environmental, health and safety concerns.

Earlier this year, three environmental groups namely Sierra Club, the Defenders of Wildlife and the Virginia Wilderness Committee filed a petition with FERC to halt the pipeline due to violation of the Endangered Species Act. The opponents claimed that the federal appeals court refuted a required permit from the U.S. Fish and Wildlife Service and allowed construction to proceed anyway. The environmental groups alleged that the pipeline's developer did not have a valid Incidental Take Statement, as the federal agency did not set specific limits on damage that can be done to endangered species during construction and operation of the pipeline.

The U.S. Court of Appeals had then temporarily suspended the construction of the pipeline in August, vacating the permit issued by the National Park Service and the U.S. Fish and Wildlife Service. While the company had been working with key agencies to resolve the issues and got the last approval to resume construction in October, the latest legal snag has again brought in troubles for the project.

Wrapping up

Dominion Energy believes that it has taken utmost care regarding the protection of endangered species during the development of the Atlantic Coast pipeline over the past four years and strongly disagrees with the court's latest decision. The company is filing a motion for emergency clarification on the scope of the court's ruling.

Notably, with the radical shift toward clean burning fuels like natural gas, Dominion Energy has been banking on booming demand for natural gas. It has started to rev up its natural gas distribution infrastructure by investing in new pipelines and expanding the existing ones.

However, the roadblocks and oppositions related to pipeline projects are rising rapidly. These are likely to be detrimental since pipelines are the lifelines of the energy industry. With production soaring and pipeline challenges raging amid dysfunctional policies and protests, prospects of the U.S. energy sector will only shine given a sound regulatory and environmental framework, which is crucial for the development of pipeline projects.

Zacks Rank and A Key Pick

While Dominion Energy currently carries a Zacks Rank #3 (Hold), investors interested in the same industry can consider Atlantic Power Corporation AT , which carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Dominion Energy Inc. Price

Dominion Energy Inc. Price | Dominion Energy Inc. Quote

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Southern Company (The) (SO): Free Stock Analysis Report

Duke Energy Corporation (DUK): Free Stock Analysis Report

Dominion Energy Inc. (D): Free Stock Analysis Report

Atlantic Power Corporation (AT): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.