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Atlantic Coast Pipeline to Have All State Permits by Mid-December, Dominion Says

Dominion Energy Inc. expects to complete the permitting phase of its 600-mile, 1.5 Bcf/d Atlantic Coast Pipeline (ACP) by mid-December, securing all necessary state approvals by that time despite pushback from project opponents, management said Monday.

The controversial natural gas transmission project received a certificate earlier this month from the Federal Energy Regulatory Commission in a rare split decision.

With FERC’s approval in place, opposition groups have turned to the states recently to try to stall the pipeline, urging regulators in West Virginia, Virginia and North Carolina to withhold water quality permits for ACP.

During a conference call Monday to discuss 3Q2017 results, Dominion CEO Thomas Farrell was asked about the scrutiny the project has received. Farrell described the state-permitting process for the pipeline as business as usual.

"We need permits in West Virginia and North Carolina and Virginia. We expect all those by the middle part of December as we're going through the process," Farrell said. "It's a very typical process. Lots of questions come from the regulators. We provide answers and make them ask more questions, and we provide more answers. But we're coming to the end of that process. And we expect to have all those permits by the middle part of December and be underway."

Farrell noted that, in addition to the FERC certificate, ACP has also secured key approvals in recent weeks from the U.S. Fish and Wildlife Service, the Virginia Outdoor Foundation and the Virginia Department of Game and Inland Fisheries.

Richmond, VA-based Dominion is developing ACP through a joint venture with Duke Energy, Piedmont Natural Gas and Southern Company Gas. The pipeline is designed to deliver Marcellus and Utica shale gas to serve heating and electric generation demand in the southeast and mid-Atlantic.

Dominion has construction contracts in place and has secured 90% of the materials for construction of ACP and the related Supply Header Project, management said. The projects are expected to be completed by the second half of 2019.

Meanwhile, Dominion's Cove Point liquefied natural gas (LNG) export terminal near Cove Point, MD, is now 97% complete and on track to begin service by the end of the year, management said.

"All processes have been turned over for site commissioning, and we have entered the final phase of start-up," Farrell said. "...FERC has approved the introduction of all hydrocarbons necessary to generate LNG," and staffing is complete. "We will begin generating LNG next month, then conclude commissioning in December, and we expect to be in service by the end of the year."

Dominion reported $187 million in quarterly operating earnings for its gas infrastructure segment, up from $135 million in the year-ago period.

The utility is also moving forward with a long-term investment program to modernize its Dominion Energy Transmission Pipeline system and storage infrastructure, Farrell said. This program will total roughly $250 million per year.

"To support this investment program, we plan to file a rate case for the first half of next year -- the first for this pipeline in over 20 years -- in which we will request updated rates and establish" cost recovery for the investments.

Dominion's interstate gas transmission subsidiary, Dominion energy Transmission Inc., operates 7,300 miles of pipeline across Ohio, West Virginia, Pennsylvania, New York, Maryland and Virginia.

Dominion reported revenues of $3.179 billion for the third quarter, versus $3.132 billion in 3Q2016.

Dominion's net income for the quarter was $665 million ($1.03/share) versus $690 million ($1.10/share) in the year-ago period.

Dominion Energy Midstream Partners LP, Dominion's midstream master limited partnership (MLP), reported third quarter operating revenues of $113 million, up from $95.2 million in the year-ago quarter.

The MLP reported net income of $48.6 million for the third quarter (35 cents/unit) versus net income of $24.3 million (30 cents/unit) in the year-ago quarter.

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