Duke Energy, Piedmont Natural Gas to build 550-mile natural gas pipeline to NC
CHARLOTTE, N.C. – Duke Energy and Piedmont Natural Gas today announced the selection of Dominion 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.
Called the “Atlantic Coast Pipeline,” it also is expected to serve as a key infrastructure engine to drive economic development and create jobs, helping counties on the pipeline’s route attract new, energy-dependent businesses and industries – especially along the Interstate 95 corridor in eastern North Carolina. The pipeline will follow I-95 through Johnston County.
Duke Energy and Piedmont selected Dominion’s project after reviewing submittals by five companies in response to an April 2014 solicitation for proposals to build North Carolina’s second major interstate natural gas pipeline.
The pipeline has an estimated cost of between $4.5 billion and $5 billion, an initial capacity of 1.5 billion cubic feet of natural gas per day, and a target in-service date of late 2018.
The project will require Federal Energy Regulatory Commission approval, which Dominion will seek to secure by summer 2016.
The pipeline’s 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. The pipeline’s owners are negotiating with other potential customers as well.
Gas will be carried through a 42-inch-diameter pipe in West Virginia and Virginia, and a 36-inch-diameter pipe in North Carolina.
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 percent ownership
* Duke Energy – 40 percent ownership
* Piedmont Natural Gas – 10 percent ownership
* AGL Resources – 5 percent ownership
In a joint statement, the four companies’ CEOs – Dominion’s Thomas Farrell, Duke Energy’s Lynn Good, Piedmont’s Thomas Skains and AGL Resources’ John Somerhalder – said the pipeline represents a major step forward for the region’s energy security, economic future and carbon reduction:
“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, contributing to significantly lower greenhouse gas and other emissions. The project will also provide more reliable access to new sources of natural gas, keeping consumers’ energy costs down – even during the coldest and hottest weather.”
Natural gas’ growing role in North Carolina
Today, North Carolina is served primarily by only one major interstate natural gas pipeline that traverses the state’s western and central regions, transporting natural gas largely from the Gulf Coast region.
To enhance reliability and energy security, Duke Energy’s and Piedmont’s solicitation sought proposals for a new, second natural gas pipeline that would transport additional large-scale supplies – from different sources – into the state.
The Atlantic Coast Pipeline will meet those objectives by roughly paralleling the Interstate 95 corridor in eastern North Carolina, and transporting gas from a different natural gas source – the Utica and Marcellus shale basins located largely in West Virginia, Ohio and Pennsylvania.
Duke Energy increasingly relies on natural gas to generate electricity after closing half of its 14 coal-fired power plants in North Carolina during the past three years.
The company has opened five natural gas-fired power plants in North Carolina since 2011 to replace those coal plants, and plans to open a natural gas power plant in South Carolina in 2017.
Natural gas-fired power plants release far fewer air emissions than do coal-fired power plants.
Duke Energy since 2005 has reduced company-wide carbon dioxide emissions by 20 percent, sulfur dioxide emissions by 84 percent and nitrogen oxide emissions by 63 percent by building natural gas-fired power plants, closing coal-fired power plants and installing additional emission control equipment.
Meanwhile, Piedmont Natural Gas’ residential, commercial and industrial customer demand for natural gas also continues to grow. Additionally, Piedmont is a major retail transporter of natural gas to power plants operated by Duke Energy and other electric utilities.
Last winter’s extremely cold temperatures – which resulted in high demand and high prices for natural gas across much of the U.S. – underscored the national need for more natural gas pipelines.
Duke Energy: owner and customer
Duke Energy will own its 40 percent share of the pipeline through the company’s Commercial Power business unit.
Separately, Duke Energy’s two North Carolina regulated utilities – Duke Energy Carolinas and Duke Energy Progress – will be customers of the pipeline, paying the pipeline’s owners to transport natural gas.
The transaction between Duke Energy’s commercial and regulated units will require North Carolina Utilities Commission approval, which Duke Energy will request this fall.
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.
Dominion is conducting land surveys along the proposed pipeline route. It will determine the final route based on landowner input; community meetings in counties on the route; consultation with government agencies and other interested stakeholders; and an environmental, historical and cultural impact assessment.
Dominion will build and operate the pipeline through a services agreement with its Dominion Transmission subsidiary, which will oversee siting, permitting, engineering and legal issues.