The Economic Impact of the Atlantic Coast Pipeline in WV, VA, and NC

When the pipeline is in full operation, the project is estimated to have an annual impact in the three-state region of $69.2 million that can support 271 regional jobs from 2019 onward. The project can also generate significant tax revenue for three state governments. This report does not quantify other significant benefits that will be derived from construction of the project, including additional opportunities for new manufacturing, greater stability in energy prices, and environmental improvements through the increased use of cleaner-burning natural gas as a source of electric generation.

Executive Summary

The Atlantic Coast Pipeline (ACP) is a major interstate natural gas pipeline construction and operation initiative proposed by Dominion Resources (Dominion) and three other major U.S. energy companies— Duke Energy, Piedmont Natural Gas, and AGL Resources. The project involves constructing about 550 miles of natural gas pipeline, as well as three compressor stations and other associated facilities across three states—West Virginia, Virginia, and North Carolina. Total capital expenditures for this project are estimated to be $4.6 billion.1 The development of ACP will occur from 2014 to 2019, with operation commencing in late 2018. A project of such magnitude will have significant impact in the three states along the pipeline.

The impact of the Atlantic Coast Pipeline in the three-state combined region is as follows:

• From 2014 through 2019, capital spending on ACP can generate an annual average of $456.3 million in economic impact (including direct, indirect, and induced) in the three-state region, supporting 2,873 jobs per year. The cumulative impact of construction is estimated to be $2.7 billion that can support 17,240 cumulative jobs in the three-state region.
• From 2019 onward, ongoing operation can produce a total of $69.2 million in annual economic impact (including direct, indirect, and induced) in the three-state region, supporting a total of 271 jobs annually.
• Ongoing operation of the pipeline can generate annual tax revenue of $418,443 from 2019 onward for the three state governments. Capital expenditure can also generate an annual average of $4.2 million in total tax revenue for the three state governments from 2014 to 2019.
  
  The economic impact of the Atlantic Coast Pipeline in the state of West Virginia is as follows: 
  
  
• Among total capital expenditure of $4.6 billion, an estimated $882.6 million will be spent in West Virginia. From 2014 through 2019, capital spending on ACP can generate an annual average of $79.8 million in economic impact (including direct, indirect, and induced) in West Virginia, supporting 516 jobs per year. The cumulative impact of construction is estimated to be $478.7 million that can support 3,093 cumulative jobs in the state.
• From 2019 onward, ongoing operation can produce a total of $15.6 million in annual economic impact (including direct, indirect, and induced) in West Virginia, supporting a total of 74 jobs annually.
• Ongoing operation of the project can generate annual tax revenue of $113,678 from 2019 onward for the state government. Capital expenditure can also generate an annual average of $661,059 in total tax revenue for the state from 2014 to 2019.
  
  The economic impact of the Atlantic Coast Pipeline in the state of Virginia is as follows:
  
  
• Of $4.6 billion in total capital expenditure, $2.5 billion is estimated to be spent in Virginia. From 2014 through 2019, capital spending on ACP can generate an annual average of $236.5 million in economic impact (including direct, indirect, and induced) in Virginia, supporting 1,462 jobs per year. The cumulative impact of construction is estimated to be $1.4 billion that can support 8,774 cumulative jobs in the state.
• From 2019 onward, ongoing operation of ACP can produce a total of $37.8 million in annual economic impact (including direct, indirect and induced) in Virginia, supporting a total of 118 jobs annually.
• Ongoing operation can generate annual tax revenue of $233,027 from 2019 onward for the state government. Capital expenditure can also generate an annual average of $2.4 million in total tax revenue for the state from 2014 to 2019.
  
  The economic impact of the Atlantic Coast Pipeline in the state of North Carolina is as follows:
  
  
• Of the total $4.6 billion in capital expenditure, $1.2 billion is estimated to be spent in North Carolina. From 2014 through 2019, capital spending on ACP can generate an annual average of $113.4 million in economic impact (including direct, indirect, and induced) in North Carolina, supporting 738 jobs per year. The cumulative impact of construction is estimated to be $680.2 million that can support 4,426 cumulative jobs in the state.
• From 2019 onward, ongoing operation can produce a total of $11.7 million in annual economic impact (including direct, indirect, and induced) in North Carolina, supporting a total of 52 jobs annually. 
• Ongoing operation can generate annual tax revenue of $71,738 from 2019 onward for the state government. Capital expenditure can also generate an annual average of $1.1 million in total tax revenue for the state from 2014 to 2019.
  
  Additionally, this study does not include estimates, on either a statewide or local basis, of local property taxes on Atlantic Coast Pipeline facilities. However, these taxes are likely to provide an important and stable source of revenue for local governments once the pipeline begins operations. Economic impact of the Atlantic Coast Pipeline in all three states as well as the combined region is summarized in Table 1.1.
  
  
  
  
  
  

Conclusion

In conclusion, the Atlantic Coast Pipeline will generate significant economic impact in three states along the pipeline in West Virginia, Virginia, and North Carolina. From 2014 through 2019, capital spending on ACP could generate an annual average of $456.3 million in economic impact (including direct, indirect, and induced) for the three-state region, supporting 2,873 jobs per year. The cumulative impact of construction is estimated to be $2.7 billion that can support 17,240 cumulative jobs in the three-state region. From 2019 onward, ongoing operation of the pipeline project could produce a total of $69.2 million in annual economic impact (including direct, indirect and induced) in the three-state region, supporting a total of 271 jobs annually. Ongoing operation can generate annual tax revenue of $418,443 from 2019 onward for the three state governments. Capital expenditure can also generate $25.0 million in total tax revenue from 2014 through 2019.

Economic impact in each individual state varies, depending on a set of factors—such as the length of the pipeline in each state, and how many compressor stations, M&R stations, other facilities, and the number of employees located in each state. The tax revenue for state governments also depends on the tax rate for each jurisdiction.

More importantly, with the booming natural gas exploration and extraction industry in the United States, power companies are increasing usage of natural gas for electricity generation. Natural gas is an environmentally responsible alternative to coal, since there is much less greenhouse gas emission. Another advantage is that abundant natural gas supply keeps prices low for consumers. The trend is that natural gas is playing an increasingly important role in supplying American electricity. Natural gas pipelines such as the Atlantic Coast Pipeline are a critical component to ensure dependability of the energy infrastructure in West Virginia, Virginia, and North Carolina.

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