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North Carolina Utilities Seek New Pipeline to Serve Southeast

Duke Energy and Piedmont Natural Gas said on Tuesday that they will issue a solicitation for proposals this week to build and operate a second major wholesale natural gas pipeline to meet growing demand for the fuel in North Carolina and surrounding states.

The utility companies said they would consider a joint venture, ownership interest, strategic partnership or another financial arrangement in support of any selected proposal.

Duke Energy, one of the largest electric power holding companies in the country with 7.2 million customers, is growing increasingly reliant on natural gas to generate electricity, while growing demand from Piedmont's one million customers compelled the North Carolina-based companies to consider investing in an interstate pipeline to bring more supplies to the underserved region.

The companies are seeking an initial pipeline capacity of up to 900 MMcf/d, with expansion capabilities and an in-service target date of late 2018. Both Duke and Piedmont said on Tuesday that they hope to select a proposal later this year.

The announcement follows a brutally cold winter that saw demand for natural gas rise significantly in nearly all parts of the country and found storage exiting the season at under 1 Tcf for the first time in years (see Daily GPI, March 28). A new wholesale pipeline would increase both companies’ "access to competitive, secure, diverse and abundant supplies," they said.

North Carolina is served primarily by a single major interstate natural gas pipeline -- Williams' Transcontinental pipeline -- which delivers just 30% of its daily flows to Georgia, South Carolina and North Carolina, according to the Energy Information Administration.

Although neither company suggested a specific route for the new pipeline, or what part of the country might supply it, they did say they have “a strong preference for a new pipeline route that provides geographical diversity relative to the path of North Carolina’s existing major wholesale interstate pipeline.”

Transco takes a south-north route through North Carolina skirting along the western part of state. Williams sought approval last year from the Federal Energy Regulatory Commission to begin an expansion of its Leidy Southeast line, which would expand Transco’s capacity by 525,000 Dth/d and provide more natural gas to utilities along the Atlantic (see Shale Daily, Oct. 2, 2013; March 31).

Like other power generators, Duke Energy has opened five new natural gas-fired power plants in North Carolina since 2011 to replace older, less-efficient coal-fired plants (seeDaily GPI, March 20), while Piedmont pipelines supply natural gas to all five of those facilities. Since 2008, EIA data shows that the volume of natural gas delivered to consumers in North Carolina has increased significantly during peak-demand months such as January, going from 31 Bcf during the month six years ago, to 58 Bcf last January.

Meanwhile, a surge in onshore production in places such as Ohio, West Virginia and Pennsylvania, has left operators clamoring for new markets in the Southeast and Midwest, with a Northeast gas surplus spurring pipe flow reversals, capacity additions and more interest in greenfield projects (see Shale Daily, Jan. 30; March 12; March 20). Since about 2006, several major transmission pipeline expansions have taken place to route more onshore natural gas production from the Southwest to the Southeast, as well.

As a result of the onshore energy boom, Duke and Piedmont said landing a favorable proposal shouldn't be difficult, while they also touted the economic benefits that a new interstate project could bring to the Carolinas and other states in the region.

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