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Scana Companies to Form New Interstate Pipeline System

Two Scana subsidiaries, South Carolina Pipeline Corp. (SCPC) and SCG Pipeline Inc. (SCG), filed a FERC application last week to merge, forming a new 2,032-mile open-access interstate gas pipeline transportation only system with about 661,000 Dth/d of estimated firm capacity.

The plan was first announced in June 2004 and follows several years of discussions with large industrial customers in the state that have been eager to manage their own gas purchases and transportation. A Scana spokesman said a recent regulatory change by FERC that would have required the two companies to change their organizational structures finally put the plan into action. The two companies have operated under one management team and would have had to split up into two management teams under new Federal Energy Regulatory Commission (FERC) rules.

SCPC President Paul Fant said that the evolving natural gas marketplace and changes in the regulatory landscape were the driving factors behind the company's decision to combine its pipeline operations. "We had hoped to reach this point sooner, but we weren't willing to rush the process," said Fant. "We wanted to make sure we had met with customers and considered all details that would be necessary in making the transition. The application we filed today is a major step towards finalizing the merger in the months ahead."

SCPC currently provides a bundled natural gas procurement and delivery service, purchasing gas at supply points in the Gulf of Mexico, holding capacity on various interstate pipelines and then delivering the gas to customers through its own 2,000-mile intrastate pipeline network. SCG Pipeline, which began operation in 2003, operates a 32-mile interstate pipeline that transports gas from the Elba Island LNG import terminal near Savannah, GA, to power plants in South Carolina.

Under the proposed merger, the two companies would operate as a single interstate, transportation-only pipeline company, called Carolina Gas Transmission Corp. (CGT), that would sell its pipeline capacity, but no longer sell natural gas. The system would be connected to Southern Natural Gas and Transcontinental Gas Pipe Line as well as El Paso's Elba Island LNG terminal.

Scana is requesting that the new merged company be in service prior to the 2006-2007 winter heating season.

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