By John Downey
Duke Energy Corp. CEO Lynn Good says the 600-mile Atlantic Coast Pipeline could now cost as much as $6.5 billion to complete — about 30% more than estimated when the project was first proposed just three-and-a-half years ago.
Good disclosed the latest estimate during Charlotte-based power company’s earnings call.
“Due to delays and more stringent conditions in the permitting process, ACP now estimates total project cost between $6 billion and $6.5 billion,” Good told analysts on the conference call.
That would put Duke’s share of the price at between $2.7 billion and $3.1 billion.
The joint project of Dominion Energy Inc. (NYSE: D), Duke (NYSE: DUK) and The Southern Co. (NYSE: SO) was announced in September 2014. At that time, the partners (including Piedmont Natural Gas, which is now part of Duke) said it would cost about $4.5 billion to $5 billion to build.
The price has risen since as regulators demanded changes to the route and other specifications to meet environmental, cultural and safety objections. The first major recognition of increasing costs came in January 2017, when the partners revised price estimates to a range of $5 billion to $5.5 billion.
Duke spokeswoman Tammie McGee says that in the past three years, ACP has “undergone the most thorough regulatory review of any infrastructure project in the region’s history.” The review led to greater restrictions on permits and hundreds of route adjustments to protect environmentally sensitive areas. All of that caused some delays to the project, she says.
The partners originally had hoped to start construction in 2016 and have the project in service by late this year. That has, over time, slipped to construction work starting by summer (there is pre-construction tree clearing already underway) and completion by late next year.
“Even so, the project remains the most competitive of all the options we evaluated in the early planning phases, and consumers in the region will realize significant energy cost savings,” McGee says. “Also, future capacity additions on the pipeline will be competitively priced for years to come when more natural gas is needed to serve North Carolina’s growth.”
Compression and extension
Good was asked about the potential for future expansion of the project at the earnings call. She said the focus for now was on building out the initial pipeline. But she said looking forward there were two ways to thing of increasing the investment in the pipeline.
The first would be to increase the compression capacity of the pipeline, which would enable it to cary a greater volume of gas. She called that “a very cost effective way to add capacity” that would “really (be) driven by a need of our customers.”
After that, she said, the pipeline partners could look at opportunities to extend the pipeline. Though she did not say so directly, such an extension would most likely involve taking the pipeline down into South Carolina — a possibility that seems increasingly likely if dominant partner Dominion completes its proposed $7.9 billion expansion of SCANA Corp., parent company of S.C. Electric & Gas and additional gas utilities in North Carolina and Georgia.