Dominion Energy’s Atlantic Coast Pipeline Suffers Setback

Dominion Energy, Inc.’s (D Free Report) Atlantic Coast Pipeline recently hit a regulatory roadblock, as a few environmental groups filed a petition with the Federal Energy Regulatory Commission (FERC) to halt the natural gas pipeline’s construction.

Environmental Safety is the Heart of the Matter

Three environmental groups namely Sierra Club, the Defenders of Wildlife and the Virginia Wilderness Committee are the ones to oppose. They want construction work of the pipeline in West Virginia — which was authorized by FERC last month — to be stalled due to violation of the Endangered Species Act. The opponents claim 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 allege 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.

While the owners of the pipeline project deny that the court rulings debunk the Fish and Wildlife Service’s approval, the environmentalists demand the construction to be suspended until a revised Incidental Take Statement is issued.

The Mega $5 Billion Natural Gas Pipeline Project

Making good on his campaign promises to rev up infrastructure spending, President Trump signed an executive order in January 2017 to accelerate the environment review process and approvals for the Atlantic Coast Pipeline. While the FERC greenlighted the pipeline project last November, it has been facing opposition on environmental, health and safety concerns.

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

The 600-mile Atlantic Coast Pipeline would 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 would transport around 1.5 billion cubic feet (Bcf) of natural gas per day to North Carolina and Virginia. 

Increasing pollution from coal-fired plants has sparked off new environmental regulations and a radical shift toward clean burning fuels like natural gas. As such, Dominion Energy, banking on booming demand for natural gas, has started to rev up its natural gas distribution infrastructure by investing in new pipelines and expanding the existing ones.

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

Zacks Rank and A Key Pick

Dominion Energy currently carries a Zacks Rank #3 (Hold).

Meanwhile, investors interested within this industry can opt for a better-ranked stock such as NRG Energy, Inc.(NRG Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NRG Energy delivered an average positive earnings surprise of 507.93% in the last four quarters.

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