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Dominion Energy : Possible expansion to S.C. leads to questions about planned pipeline's capacity Does potential expansion of Atlantic Coast Pipeline to South Carolina change equation for Virginia?

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10/05/2017 | 09:14am CEST

How much gas can the Atlantic Coast Pipeline carry?

That question surged to the front of the pack last week amid ongoing critiques including how Virginia is handling water-quality certifications for the controversial Dominion Energy-led project and arguments before the State Corporation Commission about whether Virginia ratepayers will fork over up to $2.4 billion in additional costs for what opponents say is an unnecessary new source of natural gas.

Dominion Energy'sDan Weekley, a vice president and general manager at the company, told the South Carolina Clean Energy Summit in Columbia last month that Dominion could bring "almost a billion cubic feet a day into South Carolina" when it extends the pipeline, as "everyone knows" it will, according to an Associated Press report last week.

Those remarks, pipeline opponents contend, undercut the stated rationale for the roughly $5.5 billion, 600-mile project, which, if approved, will bring Marcellus Shale natural gas through West Virginia, across Virginia and into North Carolina, with an extension running from the Virginia-North Carolina border south of Emporia to Chesapeake.

"For us, that underscores this issue that we've been focusing on: that there's not demand for new gas-fired power plants in Virginia or North Carolina that will justify the Atlantic Coast Pipeline," said Greg Buppert, an attorney with the Southern Environmental Law Center in Charlottesville, which has fought the project. "That sounds like companies looking for a market for their products because the market they've been banking on isn't materializing."

Dominion and its partners, which include Duke Energy, have said the prime driver of the project is a demand for natural gas from utilities in Virginia and North Carolina that have already signed contracts for the vast majority of the 1.5 billion cubic feet of gas a day that developers have said the pipeline will carry.

Weekley's remarks mean that either most of the gas the pipeline will carry won't go to Virginia or North Carolina or it can carry more gas than previously stated.

According to Dominion spokesman Aaron Ruby, the answer is the latter. And he stressed that no decisions have been made to expand the pipeline at this point.

Ruby said the pipeline could carry up to 2 billion cubic feet of natural gas by adding new compressor stations, beefing up the horsepower of existing stations or a combination of the two. Any additional capacity would require putting new pipe in the ground.

"It's way too premature to get into that because this is all hypothetical. Our focus right now is completing the project as proposed so we can serve the urgent needs of public utilities in Virginia and North Carolina," Ruby said.

Ruby added that the contracts for capacity on the pipeline "are 20-year binding contracts."

"Those are locked in place," Ruby said. "If we at some point were to expand the pipeline into South Carolina, that would have no impact on the service we're already committed to providing to our public utility customers in North Carolina and Virginia."

But Buppert, the SELC attorney, as other opponents have pointed out, noted that most of the capacity contracted on the pipeline is by companies that are affiliated with pipeline developers, such as Virginia Power Services, which procures fuel used by Dominion Energy Virginia, the Richmond-based utility with nearly 2.5 million customers in Virginia.

"So they're not arms-length transactions between independent market actors," Buppert said. "That definitely is a consideration when thinking about how binding these contracts are. ... Dominion could release that capacity to other users."

FERC could issue its approval of the project any day now, and the potential for any future expansion won't enter into the decision-making process, said Tamara Young-Allen, a spokeswoman for the commission.

"First of all, they have to get the current facility certificated. If they were to get a certificate, they would have to come back with a new application for the new facility," Young-Allen said.

She added that applications seeking to expand on existing infrastructure are common.

"It happens all the time," she said. "They get new customers and those customers want service to a new tap. ... Any time there's a change to what the company has certificated, they would have to submit an application to make any change to what the commission has authorized."

Ruby said Weekley's remarks, which were reported by the Associated Press via an audio recording sent to a reporter there, came in response to a question at a public forum.

"Our company has been very straightforward about the potential to expand the infrastructure in any number of public settings," Ruby said. "We constantly hear from economic developers and others in South Carolina for the need for new natural gas infrastructure in their state."

[email protected]

(804) 649-6453Twitter: @rczullo

© © Copyright 2017, Richmond Times-Dispatch, Richmond, VA, source Newspapers

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EBIT 2017 4 555 M
Net income 2017 2 285 M
Debt 2017 35 935 M
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P/E ratio 2017 22,01
P/E ratio 2018 19,56
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Average target price 80,0 $
Spread / Average Target 1,2%
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Scot C. Hathaway Senior VP-Operations, Engineering & Construction
Mark F. McGettrick Chief Financial Officer & Executive Vice President
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