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Duke Sells 3% Stake in Atlantic Coast Pipeline to Dominion

With Duke Energy Corp.'s acquisition of Piedmont Natural Gas Inc. now complete, the former has sold a 3% stake in Atlantic Coast Pipeline LLC (ACP) to its joint venture (JV) partner in the project, Dominion Resources Inc.

When ACP was announced in September 2014, Dominion held a 45% stake in the pipeline, followed by Duke (40%), Piedmont (10%) and AGL Resources (5%). The partnership agreement called for Dominion to remain lead developer of the $4.5-5 billion project.

Since Duke's stake in ACP increased to 50% after its acquisition of Piedmont closed on Monday (see Daily GPISept. 30), Duke was compelled to sell 3% of the pipeline to Dominion in order to satisfy the terms of the partnership agreement. Dominion spokesman Aaron Ruby confirmed to NGI on Thursday that Dominion now owns 48% of the pipeline, while Duke has 47%. Financial terms of the sale between Duke and Dominion were not disclosed.

Southern Co. acquired Southern Company Gas, formerly AGL, and its 5% stake in ACP for $8 billion in July (see Daily GPIJuly 5). Dominion CEO Thomas Farrell predicted such a scenario during an earnings call nearly one year ago (see Daily GPINov. 3, 2015).

Last month, ACP said the in-service date for the 600-mile natural gas pipeline would be delayed from a previous target of 4Q2018 until sometime in 2019, due to a lengthy review process by federal agencies (see Daily GPISept. 22). The company, which selected Spring Ridge Constructors LLC to build the project, hopes to begin construction in the summer or fall of 2017.

The 1.5 Bcf/d pipeline would start in Harrison County, WV, and run southeast through Virginia and North Carolina, with a lateral to southeastern Virginia. A major proposed takeaway project for the capacity-constrained Marcellus and Utica shales, ACP would supply Northeast gas to serve power generation and heating demand in Virginia and North Carolina.

According to documents Dominion filed with FERC [CP15-554], the mainline will use 42-inch diameter pipe in Virginia and West Virginia, and 36-inch diameter pipe in North Carolina. Meanwhile, the lateral to southeastern Virginia will use 16- and 20-inch diameter pipe. Dominion also told the Federal Energy Regulatory Commission that the mainline and lateral will intersect in Northampton County, NC.

Ruby said 92% of ACP is currently subscribed by public utilities in Virginia and North Carolina. Duke Energy Progress has subscribed to 452.75 MMcf/d of capacity, followed by Virginia Power Services Energy (300 MMcf/d), Duke Energy Carolinas (272.25 MMcf/d), Piedmont Natural Gas (160 MMcf/d), Public Service Co. of North Carolina (100 MMcf/d) and Virginia Natural Gas (75 MMcf/d).

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