Many major fossil-fuel projects across the U.S., from pipelines to export terminals, have been shelved or significantly delayed because of a confluence of new regulations, grass-roots opposition and a drop in energy prices.
Overall, more than a dozen projects, worth about $33 billion, have been either rejected by regulators or withdrawn by developers since 2012, with billions more tied up in projects still in regulatory limbo.
The trend leaves some communities without access to lower-cost fuel and higher-paying jobs while also reflecting a growing wariness in the public’s eye of fossil fuels.
Cancellations are affecting the coal industry’s bid to ship its product through the Pacific Northwest, where local communities are increasingly opposed to fossil fuels due to climate-change concerns.
In May, the U.S. Army Corps of Engineers rejected a proposed $850 million coal-export terminal proposed for Cherry Point, Wash., a forested, coastal area two hours north of Seattle where two oil refineries and an aluminum facility operate. The agency concluded the proposed terminal would violate tribal fishing rights of the Lummi Nation.
The Lummi Nation, which says it has called the Cherry Point region its home for thousands of years, asked the federal government to reject the project in early 2015, supported by a broad array of environmental groups.
As with other fossil-fuel projects—including the Keystone XL oil pipeline that President Barack Obama rejected last year—an alliance between Native American tribes and environmental groups proved formidable.
Overall, five of the six export projects proposed in the Pacific Northwest in recent years have been shelved by developers or rejected by government regulators. The other project, near Longview, Wash., is awaiting approval.
The Cherry Point project, proposed in 2011 by port company SSA Marine, was initially for a wider range of exports. But with coal prices high at the time, the developer secured contracts chiefly with coal companies.
“The project was quickly redefined in the public’s mind as simply a coal port,” said Craig Cole, a local consultant who has worked on behalf of the project since 2010.
Coal projects face the biggest challenges, but oil and natural-gas companies are also facing headwinds. One natural-gas pipeline proposed for the Northeast was scrapped and another rejected in recent months.
Gordon van Welie, president and CEO of ISO-New England, the region’s power grid operator, said such projects are badly needed. Residential consumers in New York and New England paid between 5% and 41% more than the national average for natural gas in March, the latest month for which data were available. They also paid more for electricity, which itself is increasingly made with natural gas.
But finding ways to move gas into the Northeast has proven difficult. Matthew Piatek, an associate director at consulting firm IHS Energy, said some natural-gas pipeline projects have been delayed by more than a year-and-a-half.
Without new infrastructure, Mr. Piatek said, “certain areas will need to rely on higher-cost sources.”
In late April, Kinder Morgan abandoned a roughly $3 billion project that would have ferried gas to Boston and elsewhere, saying it couldn’t get buy-in from utilities. The project, Northeast Energy Direct, had attracted intense opposition from local activists.
A few days later, New York regulators refused to issue a water quality permit for Constitution, a pipeline to move natural gas out of Pennsylvania to New York, as well other New England markets.
Pipeline builder Williams Cos. and its partners, including Cabot Oil & Gas Corp., proposed the 124-mile, $1 billion project in 2012. Constitution’s backers called the denial by regulators arbitrary and unjust and appealed to the courts on May 16. Cabot said recently it still hopes the line will be in service within two years.
Still, the experience will likely prompt developers to move with caution on other pipeline plans. “We’re hopeful that what New York is doing doesn’t happen in other states,” said Frank Ferazzi, general manager of Williams’ Transco Pipeline.
To be sure, some fossil-fuel projects have come to fruition in recent years despite the headwinds.
The federal government has approved a handful of plans for exporting liquefied natural gas since 2012. Dozens more are pending, though analysts say many will probably not be built even if the government approves them, given the current natural-gas glut. Two proposed natural-gas export terminals in Oregon fell through earlier this year.
From 2009 to 2014, U.S. companies added nearly 14,000 miles of crude-oil pipelines, a 27% increase, as the industry sought to catch up to a boom in domestic oil production. But most of the new pipelines were built in areas where that production was concentrated, such as North Dakota and Texas, rather than heavily populated areas, according to John Stoody, a spokesman for the Association of Oil Pipe Lines.
Meanwhile, natural-gas pipeline mileage dropped 6,640 miles, or 2%, from 2009 to 2015. Operators either retrofitted existing lines with wider pipe or increased a pipe’s compression to allow it to move more gas as natural gas production rose.
In Cherry Point, it is now unlikely anything new will be built on the 1,200 acres owned by SSA Marine. The only thing there for the indefinite future will be what has existed for decades: a rusted, dilapidated conveyor belt for cement used to build Interstate-5, the main West Coast highway constructed in the 1950s.