The proposed $5 billion Atlantic Coast Pipeline from West Virginia to eastern North Carolina has the capacity to expand if demand warrants it, Duke Energy’s chief executive officer said.
Duke’s CEO Lynn Good talked about the benefits of the pipeline during the Barclays Capital CEO Energy-Power Conference in New York City.
The Atlantic Coast Pipeline, estimated to cost between $4.5 and $5 billion, is a joint venture between Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources, with Dominion serving as builder and operator.
The interstate pipeline will transport 1.5 billion cubic feet of natural gas per day along the interstate line, starting in Harrison County, W.Va., and ending in Robeson County. Close to 10 miles of the pipeline will cross through Wilson County near Interstate 95. The line’s capacity could increase to 2 billion cubic feet of natural gas per day, if demand warrants it, Good said.
“If there’s a demand, the capacity could increase to 2 billion,” said Dave Scanzoni, Duke Energy spokesman. “That would be a 33 percent increase.”
The increase would require a separate Federal Energy Regulatory Commission approval, Scanzoni said. The increase would not require a new pipeline because the additional capacity would be moved with increased pressure in the line. Only additional compressor stations would be needed to move the gas, which will originate from the Utica and Marcellus shale basins in West Virginia, Ohio and Pennsylvania. The Marcellus shale, rich in natural gas resources, is one of the largest shale regions in the United States.
Dominion Resources is leading the construction for the project and will apply for Federal Energy Regulatory Commission approval for the 1.5 billion capacity pipeline, which company leaders anticipate by the summer of 2016. Construction will take two years before the line is operational in 2018.
The majority, 92 percent, of the natural gas has already been contracted out to six customers, Dominion’s CEO Thomas Farrell II said Wednesday to investors. The remaining 8 percent will be available for new customers that participate in an upcoming open season that allows potential customers to express their interest. Customers then negotiate a purchase.
The pipeline’s main customers are Duke Energy Carolinas, Duke Energy Progress, Virginia Power Services Energy, Piedmont Natural Gas, Virginia Natural Gas and PSNC Energy that collectively will purchase the pipeline’s capacity.
The pipeline will create a new source of natural gas for the companies, some which supply natural gas to North Carolina. The line will have three interconnections for Piedmont Natural Gas and will provide a second source for the company that will not have to solely rely on North Carolina’s only other pipeline that provides natural gas from the Gulf Coast.
Scanzoni said the new supply will not only benefit Piedmont Natural Gas but also its customers, one which happens to be the city of Wilson.
The second source will alleviate price spikes, similar to ones that occurred during last winter’s “polar vortex,” which increased prices 20 to 25 percent. Good said Wednesday that the need to provide another supply of natural gas had become acute due to the increased prices earlier this year.
“There won’t be price spikes like there were last year,” Scanzoni said. “By building this pipeline, we’ll kind of circumvent that problem. It will keep our rates from going through the roof if there’s a cold snap.”
The largest user of the natural gas pipeline will be Duke Energy, which is relying more on natural gas to generate electricity than coal. During the past several years, the company has closed half of its 14 coal-fired plants and opened five natural gas-fired plants in North Carolina.
Some of the drivers that could lead to increased natural gas capacity in the line include an interest from other utility companies or major industries, Scanzoni said. The interstate pipeline is planned because of the increasing needs for natural gas by electric and gas companies and for industrial recruitment. The new source of natural gas will bring benefits to eastern North Carolina, Scanzoni said.
“One of the biggest weaknesses we’ve had in eastern North Carolina is related to energy, both the cost of energy and the access of energy,” Gov. Pat McCrory said Tuesday, during his Wilson visit to announce the project.
“(This) will turn a weakness into a new strength, it will create jobs, it will create lower costs and it’s going to help our economic development recruitment.”
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