Duke Energy (ticker: DUK), Piedmont Natural Gas (ticker: PNY) and AGL Resources (ticker: GAS) have selected Dominion (ticker: D) to build and operate a 550-mile interstate natural gas pipeline from West Virginia, through Virginia and into eastern North Carolina to meet the region’s rapidly growing demand for natural gas, the companies announced Tuesday. The pipeline cost estimate is between $4.5 billion and $5 billion and it has an initial capacity of 1.5 Bcf of natural gas per day, with a targeted in-service date of late 2018. The new pipeline will transport gas from the Utica and Marcellus shale basins located largely in West Virginia, Ohio and Pennsylvania, using a 42-inch-diameter pipe in West Virginia and Virginia, and a 36-inch-diameter pipe in North Carolina. The Atlantic Coast Pipeline is expected to serve as a key infrastructure engine to drive economic development and create jobs and attract energy-dependent businesses, especially along the Interstate 95 corridor in eastern North Carolina. This will be North Carolina’s second major interstate natural gas pipeline. The project needs Federal Energy Regulatory Commission approval, which Dominion will seek to secure by summer 2016. The pipeline will surely provide relief to pipeline capacity in the northeast, which has been operating near 100% for years. Main customers are six utilities and related companies that collectively will purchase a substantial majority of the pipeline’s capacity to transport natural gas – Duke Energy Carolinas, Duke Energy Progress, Virginia Power Services Energy, Piedmont Natural Gas, Virginia Natural Gas, and PSNC Energy. The purchases will be made through 20-year contracts, subject to state regulatory approval. Four regional owners In addition to its role as builder and operator, Dominion will be one of the pipeline’s four owners – all based in the Mid-Atlantic or Southeast U.S.:
- Dominion – 45% ownership
- Duke Energy – 40% ownership
- Piedmont Natural Gas – 10% ownership
- AGL Resources – 5% ownership
Pipeline route The pipeline will begin in Harrison County, W.Va., at an existing natural gas transmission facility, then travel southeast through four other West Virginia counties and 13 Virginia counties before entering North Carolina. A separate, 70-mile extension pipeline will split off from the main pipeline at the Virginia-North Carolina border, traveling eastward through southeast Virginia to that state’s Hampton Roads region, which includes Norfolk and other cities served by Virginia Natural Gas, an AGL Resources subsidiary. In North Carolina, the pipeline will enter the state in Northampton County, travel southwest through six other counties, then terminate in Robeson County at existing Piedmont Natural Gas transmission facilities.
“The Atlantic Coast Pipeline is a transformational project for our region. It will create thousands of construction jobs during development and significant new revenue for state and local governments throughout North Carolina, Virginia and West Virginia. The expanded source of gas will also help fuel economic development across the region as businesses and homes rely more on natural gas. Natural gas is increasingly important for advanced electricity generation,” the companies said in a joint statement. [sam_ad id=”32″ codes=”true”] Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.