Gas-Hungry NC Waving $200M Enticement
Hungry for gas service in its northeastern region, North
Carolina is dangling a $200 million carrot before the industry in
the hope of attracting new infrastructure development. The
enticement has attracted the attention of Williams Gas
Pipeline-Transco and six others who recently filed to express their
interest to the North Carolina Utilities Commission.
Transco, which has provided transportation service to North
Carolina for nearly 50 years, told the commission it has submitted
a proposal to the Albemarle Regional Energy Authority (AREA) for a
joint venture in developing gas transmission and distribution
facilities in five counties: Camden, Currituck, Chowan, Pasquotank
The North Carolina Utilities Commission recently told those
interested in seeking the $200 million state bond funds to file
non-binding notices of interest with the commission. Williams said
it will make a formal presentation of its proposal to AREA leaders
Gisele Rankin, an attorney with the public staff of the North
Carolina Utilities Commission, said Williams-Transco is one of
seven parties giving notice to the commission regarding the bond
money. The others are North Carolina Natural Gas Corp., Carolina
Power & Light Co., Frontier Energy, AREA itself, the City of
Elizabeth City (which, she said, is not eligible to receive any of
the money), and Public Service Co. of North Carolina Inc. (which
only filed to reserve its right to express interest later).
The money was approved by North Carolina voters in November in a
referendum that included monies for water and sewer improvements.
"We've got a long history of trying to expand the gas
infrastructure in the state," Rankin said. "A third of our counties
were un-served in 1990."
The statute that created the funding says money is to go to
areas that are "un-sourced" for natural gas. Companies are eligible
to receive amounts only to the extent they offset projects'
negative net present values as determined by commission studies.
Rankin said hearings to determine recipients could take place in
early fall. The full $200 million likely won't be available right
away but will be paid out over a few years depending on the state's
budget, Rankin said.
The Transco notice to the commission says "due to the
preliminary nature of Transco's discussions with AREA, the exact
nature and extent of Transco's work with AREA is still
undetermined." However, the notice also says Williams is "committed
to providing every feasible assistance to AREA or other entities
seeking to provide natural gas to northeastern North Carolina."
"[T]his venture would create an opportunity for industrial and
electric generation facilities to locate in these counties," said
Cuba Wadlington Jr., general manager of Houston-based
Williams-Transco. "In addition to providing an economical source of
energy for the residents of northeast North Carolina, our proposal
could enhance the overall economic development in this area."
Orlando Alvarado, project development representative for
Williams Gas Pipeline-Transco, said about 15% of the mainline's
throughput is delivered in North Carolina. "So we deliver an
abundant amount of gas to the state, and this is just one more way
of trying to serve market areas in the state that have not been
Alvarado said any bond money received would not apply to
existing or announced projects, such as its Pine Needle LNG project
or its Cardinal extension project. "All this is going to be in
conjunction with LDCs in the [un-served] area," Alvarado said of
potential bond-funded development.
North Carolina's initiative to attract infrastructure is not
unusual, Alvarado said, although "this is the first time I've heard
of anything like this happening. I think it's very positive that
they're doing this. This is definitely going to cause
[infrastructure development] to happen, or at least it's going to
cause several companies to look at the viability of it. Hopefully
the outcome is that the eastern part of the state does get a gas
The fact that much of the Carolinas lack natural gas service,
coupled with much activity in development of gas-fired power
generation in the states, has made the region ripe for pipeline
Carolina Power & Light (CP&L) and Southern Natural Gas
(Sonat) are planning a 175-mile pipeline from the terminus of
Sonat's system in Aiken, SC, to an interconnect with North Carolina
Natural Gas in Robeson County, NC. Almost immediately after the
project's announcement, Scana Corp. and Transco voiced their
objections, saying they could provide a cheaper and more
environmentally friendly alternative.
The CP&L-Sonat joint venture is called the Palmetto Pipeline
and has a planned initial capacity of 200 MMcf/d to 300 MMcf/d and
can be expanded to accommodate future growth. CP&L plans for a
substantial portion of the capacity to fuel new electric generation
being developed in the Carolinas, with the remainder used to
increase regional gas availability. CP&L also is in the process
of buying LDC North Carolina Natural Gas for $354 million.
Scana's competing project is a 160-mile extension from Grover,
SC, to Pembroke, NC, where CP&L is potentially going to build a
gas-fired power plant. Scana projects savings over the Palmetto
project of between 25% and 40%. In February Scana said it would buy
Public Service Company of North Carolina for $900 million,
including assumption of about $250 million in PSNC debt.
In December Frontier Energy began flowing gas in Surry, Wilkes
and Yadkin counties (see NGI Dec. 21, 1998). Frontier interconnects
with Transco near Salisbury, NC and is a partnership of Sempra
Energy Utility Ventures and Frontier Utilities of North Carolina,
which is principally owned by ARB Inc. of Lake Forest, CA, and
Joe Fisher, Houston