WVU economist speaks on canceled Atlantic Coast Pipeline

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MORGANTOWN, W.Va. – The recent announcement that the Atlantic Coast Pipeline, a 600-mile natural gas pipeline project stretching from Harrison County to North Carolina, had been canceled had major implications for the state of West Virginia.

This is according to West Virginia University Economist Brian Lego who said the loss of the pipeline probably means the loss of several thousand high paying jobs in fields such as construction and engineering. Lego said the work done in the state only amounted to mostly tree clearing and some environmental landscape preparation work, for the most part, meaning there was a lot left to be done.

Brian Lego

When the pipeline reached the peak of construction, say next year, maybe the year after that, depending on when they could get started again and work toward completion, you would’ve seen a lot more jobs showing up in places like Upshur Co., Pocahontas Co., and others just to meet the needs of the project. Losing those jobs, you’re losing on average — I think many of those jobs were paying in excess of $100,000 on an annual basis. Some may not have lasted quite the equivalent of a year, but all told they were still paying really high wages and so that’s — in that regard that’s a pretty significant loss for the state’s economy for the next year or two.

Brian Lego – Research Assistant Professor, WVU Bureau of Business and Economic Research

Lego said the reason the pipeline project was scrapped is largely due to the cost of the project, which was initially slated to cost $4 billion when first announced in 2014, but was doubled to $8 billion after it was started. Those cost overruns, Lego said, stem from the increasing cost of labor and materials.

In addition to cost issues, there was the myriad of legal and regulatory challenges the project faced along every step of the way, Lego said. This added layer on top of the cost issues forced Dominion Energy and Duke Energy to reconsider the project and cancel it, he said.

When asked if he sees a potential of the project being restarted, Lego had this to say:

“I don’t likely see it happening,” he said. “It would require a smoother glide path for legal and regulatory review because that would streamline the period in time which it would take to get the project completed. That would be the most likely scenario, but on the face of it, Berkshire Hathaway purchased the assets of Dominion, so it would be up to them whether they want to handle that project. It’s really hard to conceive the project going forward at this point.”

The real loss is not in the jobs created during the construction period, Lego said, but the jobs that would have been sustained by the pipeline when it was operating. Lego said the pipeline was essential for moving liquified natural gas to the wells, powerplants, industrial users, or to the manufacturing facilities that are going to take the natural gas and turn it into some kind of plastic materials or chemicals. Then there is also the issue of exporting natural gas to states and countries that have a high demand.

Without these capabilities, Lego said, then there is a worry about the growth of the natural gas industry. The real improvement for West Virginia’s economy rested in the aforementioned value-added activities that the pipeline would have created, meaning the greater impact of the cancellation has yet to be seen.

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