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Dominion, Duke propose $5B natural gas pipeline

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By JONATHAN FAHEY
AP Energy Writer

NEW YORK (AP) - Dominion Resources, Duke Energy and other partners are proposing a $5 billion natural gas pipeline to connect the Southeast with the prodigious supplies of natural gas being produced in Pennsylvania, Ohio and West Virginia.

Gas is being relied upon to generate more of the nation's electricity in recent years because enormous new domestic supplies have drastically lowered its price and because natural gas burns cleaner than the nation's other most important fuel for electric power, coal.

The 550-mile project, called the Atlantic Coast Pipeline, would begin in Harrison County, West Virginia and stretch through Virginia and North Carolina to Robeson County, near the South Carolina border. It's designed to tap the rapidly growing supplies of gas produced in two geologic formations, known as the Marcellus and Utica shales, that are now accounting for more than a quarter of the nation's natural gas. In the past, the Southeast has received nearly all of its gas from more traditional gas-producing states of Louisiana, Texas and Oklahoma.

Utilities prefer having diverse sources of fuel to reduce shortages and price spikes that can arise in terms of high demand, such as hot summers or cold winters. Also, demand for natural gas for electric power generation, heating and manufacturing is expected to continue to rise.

Clean air and clean water regulations - some already approved and some in the process of being finalized - are expected to make burning coal more difficult and expensive in the future. In response, utilities are preparing for increased use of natural gas.

"We've retired half of our coal fleet for the last 5 years, and certainly that will continue," said Duke Energy CEO Lynn Good in an interview Tuesday. "We see natural gas as an important part of the electricity generation mix for many decades to come."

Burning natural gas emits almost none of the toxic chemicals and particulate matter that burning coal produces, and about half of carbon dioxide, which scientists say is responsible for climate change.

Natural gas does have its own environmental drawbacks, however. When the gas leaks or is otherwise released directly into the atmosphere it heats the planet much faster than carbon dioxide. And the drilling technique that has led to increased U.S. supplies, called fracking, has raised concerns about water use, water contamination and other issues.

The pipeline is already sparking some protest along parts of its proposed route from landowners who worry that the pipeline could reduce property values, threaten water supplies and keep tourists away.

"It's a dark day for the Shenandoah Valley and our part of the country," said Nancy Sorrells, co-chair of the anti-pipeline group Augusta County Alliance of Tuesday's announcement.

The pipeline is estimated to cost between $4.5 billion and $5 billion to build. Dominion Resources Inc. would own 45 percent of the project, Duke Energy Corp. would own 40 percent, Piedmont Natural Gas Co. would own 10 percent and AGL Resources Inc. would own 5 percent.

The pipeline would carry a huge volume of gas - up to 1.5 billion cubic feet of natural gas per day. By comparison, the U.S. consumed 71 billion cubic feet of gas per day last year, according to the Energy Department. Yet Tom Farrell, Dominion's CEO said Tuesday that most of the gas is already spoken for, and he expects the rest to be snapped up later this year after the companies open up the remaining capacity for bidding.

Virginia Gov. Terry McAuliffe said the proposed pipeline would be a boon for the state's economy for the construction jobs to build the pipeline itself and because the additional natural gas will allow the state to recruit more heavy manufacturers.

"This is a game changer for manufacturing for us," he said.

The pipeline requires approval from the Federal Energy Regulatory Commission and state regulatory commissions. The pipeline partners expect to receive approval by mid-2016 and to start operating the pipeline in 2018.

___

AP Writer Alan Suderman contributed to this story from Richmond, Virginia. Jonathan Fahey can be reached at http://twitter.com/JonathanFahey .

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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