Scana Corp. did a little more than dust off its proposedCarolina’s interstate gas pipeline project last week. The company,along with Raleigh, NC, developer DFI Group Inc. and North CarolinaGovernor James Hunt, announced a $1.4 billion project that wouldcombine a new interstate gas pipeline with three new 200 MW powerplants, three ethanol production facilities and a new fiber opticcable in eastern North Carolina.

It was clearly a new twist on Scana’s prior interstate pipelineextension plans, which were shelved last year after Carolina Powerand Light changed its mind on the location and timing of severalpower plants and came up with a pipeline plan of its own. Scanapreviously announced intentions to convert its 1,900-mile SouthCarolina Pipeline system, which has an upstream connection toSouthern Natural, to an interstate pipeline serving eastern NorthCarolina with a 160-mile extension from Grover, SC, to Pembroke,NC. Under the new proposal, Scana would extend the system 300 milesto the proposed ethanol facilities and power plants in Onslow,Greene and Martin counties, NC. The power plants would be builtnear the ethanol facilities and the fiber would be laid in thepipeline trench.

“We are extremely excited about this project and expect thefeasibility studies regarding the pipeline, generation facilitiesand fiber optic communications to be completed in the next sixmonths,” said South Carolina Pipeline Corp. President Asbury H.Gibbes. “This enormous agribusiness project would not only providea tremendous economic development boost to eastern North Carolina,but would advance our plans to expand Scana’s gas transmissionnetwork into North Carolina to provide the state with a neededsecond source of natural gas.” Currently North Carolina gets all ofits gas from Williams-Transco. Southern Natural is the upstreamconnection for South Carolina Pipeline.

“As the governor said Tuesday, we think the stars are finallyaligned to make this project doable,” said Scana spokesman RogerSchrum. “A couple of the things that made it doable include theneed for a new cash crop in North Carolina with tobacco going thedirection it’s going in, and secondarily the need for analternative oxygenate for gasoline as MTBE comes under closerscrutiny.”

Using ethanol to make ETBE has been an accepted replacement toMTBE, which has been used for some time to reduce ozone emissionsbut was found to have unexpected environmental side effects. “Theseparticular ethanol plants will use a combination of corn and aperfected sweet potato that North Carolina state researchers havedeveloped that would work in making the mash for distillation intoethanol,” said Schrum.

There also would be a significant amount of power left over forthird party sales. The company also is reviewing proposals toprovide gas to other customers in the eastern North Carolina. “Weare still talking with a number of other industrial customers andmunicipalities who are interested in getting natural gas to theeastern part of the state,” said Schrum. “There’s also somediscussion about the municipalities in the eastern part of thestate possibly developing some retail distribution systems.”

Scana already has experience laying fiber in the state. Itrecently completed development of a $13 million fiber opticextension from Charleston, SC, to Raleigh, NC. “We are in the fiberoptic business in the Southeast. If we do put the pipeline inthere, we will look very closely at adding fiber. A lot of folkshave been running fiber in old gas pipelines. A lot of natural gascompanies — the Williams Companies, Enron — who are already inthe telecommunications business are using their rights of way forplacing fiber. But this would be a new idea for North Carolina. Thecosts are so much less because you’ve already secured right of wayand since you are burying a pipe and the fiber at the same time. Itreduces your construction costs for both pipe and fiber projects.

“But what’s really going to drive the project is marketavailability and as you know eastern North Carolina is a prettyrural area. The needs for fiber optic, while we know it’simportant, are [not clearly known]. We do need to have a market tobring that fiber in.”

Scana already has done some preliminary work for a FERC filingon this project. It is expected to be filed later this year. “Ourhope is that we have completion of this project along with theethanol and cogeneration facilities by the end of 2003, potentiallyearly 2004.”

Scana, headquartered in Columbia, SC, is one of the largestretail gas marketers in the Southeast with more than 1 millioncustomers in Georgia, South Carolina and North Carolina. It is thesecond largest unregulated retail gas marketer in Georgia with morethan 400,000 customers. The company also operates the largestelectric utility in South Carolina, serving 525,000 customers. Inaddition, it has significant telecommunications operations andinvestments.

Rocco Canonica

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