Another VA Gas Pipeline Project Dies Under Fire

Still Alive? The northern part of the Header Improvement Project. Source: VNG Application.

By Steve Haner

Another proposal to build a pipeline pumping wealth and prosperity into the Virginia economy has been brought down. That is my impression of what the impact would be of expanding natural gas supply to our state – added wealth and prosperity. This beneficial project is not to be.

Virginia Natural Gas has notified (read it here) the State Corporation Commission that it is abandoning plans for the Header Improvement Project, a major expansion connecting existing major transportation pipelines with its Hampton Roads service territory. That also ends its plans to provide service to two merchant electricity generating plants in Charles City County that would have been served by the additional supply.

The dispute over the expansion was discussed here earlier this year. The project drew the usual environmental objections, based on their firm belief that natural gas pipelines deliver death, but the SCC itself sank the plans over its skepticism that one of the electric generation plants would actually get built and need the supply. Writes VNG through counsel:

The Preliminary Order, among other things, directed the Company to file on or before December 31,2020, confirmation that “(i) C4GT’s financial close is scheduled, certain, and imminent; (ii) C4GT has approved expenditures by the Company on the C4GT components of the Project; and (iii) all relevant aspects of the agreements between C4GT and VNG remain in full force and effect.”1 The Company presents this letter to inform the Commission that the conditions precedent related to C4GT will not be satisfied on or before December 31,2020.

Which of the conditions related to C4GT would not be met is not specified.  It could be one or all three.

Without C4GT as a firm customer, more of the project’s capital costs might have landed on the other customers of the gas company. Virginia Natural Gas did not follow the path now common for Dominion Energy Virginia, which is to have the General Assembly and Governor dictate what energy project is “in the public interest.” The risk that customers might have to pay for unnecessary projects never seems to deter legislators.

Now abandoned: Planned parallels to existing VNG pipeline northeast of Richmond. Source: SCC

There are some enhancements that VNG will be moving forward on, improving its connections with the Transco main line. Existing customer such as Columbia Gas and a public service authority need some new supply. Presumably the 14- mile section of parallel pipe around Mechanicsville and Ladysmith compressor shown on this map are going away, but some version of the Transco tie-ins at the northern end in Fauquier and Prince William counties will proceed.

It will only proceed with SCC permission, however, and it will seek that through the existing case. It is possible the same environmental groups still will try to kill even this minor improvement. Their ultimate goal is to have natural gas, with all the energy and wealth it represents, nevermore be extracted from the Earth to warm your home, make your electricity, or energize your manufacturing plant.

With the earlier death of the Atlantic Coast Pipeline project and now this, Utopia must appear closer to them. All attention and contention now focuses on the Mountain Valley Pipeline, burdened by the additional costs and delayed construction schedule from the endless legal battles, but still struggling to proceed.

There is another planned natural gas merchant power plant, the 1,750 megawatt Chickahominy Power, still alive in Charles City County. It has received much of the permitting it needs. It will need another source of gas supply to proceed, although its process can also use at least some hydrogen. No announcements have been made about its plans.

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28 responses to “Another VA Gas Pipeline Project Dies Under Fire

  1. Steve, what does this mean for the gas supply to Hampton Roads? No expansion of gas to homes? No new gas-figured industrial plants?

    • I assume if those Transco connection-related only improvements are constructed, some customer expansion is possible. My guess is without those a world of hurt results. But that is the goal, isn’t it? Natural Gas is Evil and Must be Eliminated. Writing about this I’ve heard some grumbling that VNG didn’t really need to go the Certificate of Public Need and Convenience route (CPNC) and has some ability to move on its own. If so, not sure why it didn’t.

  2. So why doesn’t the SCC let the free market work?

    • Because it follows the law. It is charged with trying to balance competing interests. You’d be the first to scream bloody murder if pipelines just starting taking rights of way with no initial permits….

  3. An elephant in the room here (admittedly off thread) is the distributed electrical load and generation capacity imposed on utility systems by all those magical electric cars being charged overnight (and when solar is not available). Generation capacity is still needed somewhere in the equation.

    While some older Teslas required 72 amps at 240 volts … newer cars are limited to a 48 amp max. Hopefully grids can accommodate the added load if most is in off peak hours. Unfortunately many owners will come home from work and plug in their cars just as evening lighting turns on and folks are cooking dinner. Owners report that trickle charging sucks and takes overnight to replenish 30 miles of driving.

    Maybe the woke crowd will come to realize that something has to power all that demand. Perhaps we’ll still be using natural gas and diesel fuel for some time to come. Of course, most of us will have installed rooftop solar and battery arrays?!

    • Come on Man……. don’t let reality and facts get in the way….solar, wind, unicorn farts, and rainbow power!

    • Some of the electric car stuff :

      1. – is not going to happen overnight – it takes a while for new cars – electric or not – to cycle into the total fleet and older ones go away.

      2. – it might also depend on where the car is during the day – also. I know someone who has one and they plug in at work during the day.

      3. – Dominion and company are supposed to do an integrated planning process that, in my mind, should address this issue (and perhaps they already have)

      4. – Gas is not going to go away for awhile. It’s basically the only “fuel” that can fire up quickly and turn down quickly. Most older Nukes cannot do that – it takes hours/days for them to modulate.

      5. – But the more renewables we have – the less gas we’ll have to burn at times when we do have renewables generating.

      6. – If the Dems and enviro-wacadoodles don’t “get” the reality of the need to continue to use gas (though less and less of it ) – then they will get slaughtered at elections – and should.

      • 1. Some car makers are going all electric

        2. Doesn’t require generation somewhere?

        3. Problem obviously solved. What was I thinking?

        4. 5. 6. Wow we finally agree on something!

        • We have to be a bit careful with the term “all-electric”.
          In some parts of the world, that term includes hybrids and plugin hybrids.

          California is saying only all-electric BEV battery electric vehicles are acceptable in Ca., which is a bit extreme.

  4. Look, a Swedish teenager thinks only renewables is OK. And how about all the people who write editorials?

  5. Earth will be glad when we’re gone.

  6. James Wyatt Whitehead V

    The Transco work in Fauquier was very unpopular. Rebuked by the county board of supervisors and foul was cried by the farmers.
    https://www.fauquier.com/news/farm-owners-firm-accuse-pipeline-company-of-bullying/article_f9bc9f60-4da1-11ea-a076-cf81fa7ba850.html

  7. Baconator with extra cheese

    Man that gas would have come in handy keeping those pot grow ops warm… but we’ll end up importing it from forward thinking states and missing out on the taxes.

  8. Steve, you posit that “natural gas supply to our state – [creates] added wealth and prosperity. This beneficial project is not to be.”

    This is where we differ. The marketplace was at work here. VNG canceled the project because the SCC said that unless VNG can show it actually has customers for the project it should not make an investment for which its gas customers would have to pay – when they would receive little benefit from it.

    C4GT cannot get financing because investors see that it is unlikely to pay for itself. Chickahominy is not listed by its developers as being a project in its development queue.

    Dominion wanted to be a customer but it has shown no need to build a new peaking facility and has made no application for one.

    Columbia Gas has claimed it would be a customer on the pipeline but has shown no evidence that it needed the additional capacity. They are likely seeing declining demand as are other utilities in the state.

    The old equation that increasing energy demand equals greater wealth and prosperity is what is no longer valid. Assuming it still holds true is what is distorting our energy policies.

    Every time a utility in Virginia adds a new project our energy prices go up. Higher energy prices work against increasing wealth and prosperity.

    Greater wealth, more jobs, and increased economic activity will be created when we design an energy system around the concept of greater energy productivity, not greater energy use.

    • They want the 3 ton SUVs. They want the 80 inch screens and 3700 sq ft houses and long commutes. They won’t want what you are selling. No argument about the value of improved productivity but the demand will still grow.

      • I think TomH makes a good point about “productivity” though and who is supposed to pay for it and how do we assign those costs .

        Are the pipeline folks rent-seeking?

        • No more than the wind and solar developer$. Absolutely no less or no more. They have the same motive$.

          Watch what happens with the now-scaled down VNG request, the one that clearly is to support proven customer demand. The opponents will be just as fierce.

          • Are there stranded capital costs for wind/solar like there is for pipelines and eletricity generation?

          • Baconator with extra cheese

            Of course there are “stranded costs”.
            Nothing last forever…. and 600 ft dilapidated windmills falling over is not cool. There will be tear downs.

          • standed capital costs for solar?

      • Greater demand has not been the case in Virginia in the past 8-10 years. All customer segments, except data centers, have experienced lower demand in Dominion’s service territory and the big price increases have not arrived yet.

        Many wind generators have been repowered with new turbines on existing towers. This is accomplished at a lower price of energy from the repowered facilities.

  9. Larry,

    There are typically not stranded costs for solar since there are only small ongoing maintenance expenses. Nearly all of the cost is the initial capital cost. As that is paid, the energy produced has a nearly zero marginal cost.

    A gas-fired power plant that takes 35-40 years to pay off, but must be closed after 20+ years to meet legal requirements would have significant stranded costs that would probably be passed on to ratepayers. This would apply to the $500 million peaker plant that Dominion wants to attach to the VNG pipeline.

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  12. So, a question.

    Can a company use eminent domain to condemn land for a pipeline that will take gas to a port to export it?

  13. Not if the pipeline is intended to primarily serve an LNG export facility. That is covered under a different section of the Natural Gas Act than the section that applies to regular gas transmission pipelines. Congress has specifically prohibited the use of eminent domain for import/export related facilities.

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