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Utility Quartet Files for Marcellus/Utica Pipeline Project

The backers of the Atlantic Coast Pipeline, led by Dominion, have filed to begin FERC's prefiling process for the 550-mile project, which would cost more than $4.5 billion and deliver Marcellus/Utica shale gas to Virginia and North Carolina.

Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources are backing the project, which was announced last month (see Daily GPI, Sept. 2). Atlantic Coast would run from Harrison County, WV, southeast through Virginia with an extension to Chesapeake, VA, and then south through eastern North Carolina to Robeson County. The main pipeline would be 42 inches in diameter in West Virginia and Virginia, reducing to 36 inches in North Carolina.

The pipeline would help meet growing gas demand in Virginia and North Carolina by providing direct access to production in the Marcellus and Utica shales of West Virginia, Pennsylvania and Ohio.

"The broad and enthusiastic support we have received since announcing the project last month is further evidence of how important the Atlantic Coast Pipeline is to the future of the region," said Diane Leopold, president of the company's Dominion Energy business unit.

During a third quarter earnings conference call on Friday, Dominion executives said netbacks to producers shipping on the new pipeline would be competitive under the pipeline's straight fixed-variable rate design. Offtake contracts are with regulated utilities, which would be paying the pipeline's demand charge.

Much of the gas that would be transported by the pipeline could replace coal in the generation of electricity, Dominion said, adding that the transition from coal to natural gas for power generation is "already well under way in both Virginia and North Carolina as older, less efficient coal units are retired."

According to Dominion, from 2008 to 2013, demand for gas-fired electric power generation grew by 459% in North Carolina and 123% in Virginia. The U.S. Energy Information Administration's 2014 Annual Energy Outlook reported that overall, demand for natural gas for all uses grew by 50% and 37% in North Carolina and Virginia, respectively, between 2008 and 2012, Dominion said.

Dominion is surveying to determine the best route for the pipeline. The company said it expects to file its Federal Energy Regulatory Commission application next summer, receive a certificate for the project in summer 2016 and begin construction shortly thereafter. The pipeline is expected to be in service by late 2018.

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