In the second announcement this month about expanding pipelinecapacity for the growing and hungry gas-fired power generationmarket in the Southeast and Mid-Atlantic regions, Duke Energy GasTransmission said it plans to extend its East Tennessee Natural GasSystem with a 95-mile extension from Virginia into North Carolina.

The 24-inch pipeline, which would be completed in 2002, would becoupled with DEGT’s East Tennessee system mainline enhancements toinitially transport 200 MMcf/d of natural gas beginning in the fallof 2002. The extension would be expandable, in increments, to 600MMcf/d.

Earlier this month, Dominion Transmission unveiled plans to build anew pipeline to serve portions of the same region (see Daily GPI, Oct. 3), which would serve new power plantsin Virginia and North Carolina beginning in 2005. There was noreaction about DEGT’s competitive proposal.

DEGT’s Patriot extension would bring natural gas service toportions of southwest Virginia for the first time, and introduce acompetitive supply of natural gas to North Carolina fromAppalachian and Gulf Coast producers.

The extension would be the centerpiece of a $215 million projectby Duke Energy’s Houston-based division, which is responsible forthe company’s interstate natural gas pipeline operations.Originating in the East Tennessee system in Wythe County, VA, thePatriot extension would cross Carroll, Patrick and Henry countiesin Virginia, then terminate in Rockingham County, NC.

According to Duke, the Patriot Extension would help meet theannual 4% natural gas growth in the region currently being drivenby strong demand for natural gas-fired electric generation.

“Our discussions with potential Virginia and North Carolinacustomers showed a strong need for additional natural gas supplies,supply diversity, transportation and competition in the region,”said DEGT President Robert B. Evans. DEGT is building newrelationships with storage providers and local producers who wouldprovide “significantly increased natural gas supplies” into theEast Tennessee system from the Appalachian area, Evans said.

“While most of the Appalachian production has traditionally gone tothe Northeast, local producers now are seeing value in the southeastmarket and are planning infrastructure additions accordingly,” hesaid. “This enhanced supply and extended market reach strategy wascontemplated when we purchased East Tennessee less than a year ago.”(See Daily GPI, Jan. 6).

Dominion’s Greenbrier Pipeline project also targets themid-Atlantic region. Its greenfield pipeline would transport up to600,000 Dth/d of Appalachian, Canadian and Gulf Coast gasproduction to the region. It would extend about 200 miles fromDominion’s Cornwell Station near Charleston, WV, connecting withthe Transcontinental Gas Pipe Line in Rockingham, NC.

Whether FERC would give the go-ahead to both projects isquestionable, but DEGT’s Tom O’Connor, senior vice president formarketing, said that there are significant differences between thetwo proposals, which would give Duke Energy the edge.

Citing the “supply diversity” that DEGT is proposing, O’Connorsaid that the expansion would bring supplies from the Gulf Coastthrough the Appalachian region into the Carolina markets. He alsosaid that the size of DEGT’s expansion was better suited to thearea.

“This is the right size of capacity to enter the market,” saidO’Connor, citing DEGT’s proposed initial capacity of 200 MMcf/dversus Dominion’s proposed 600,000 Dth/d. DEGT’s pipeline expansionalso would be completed nearly three years before Dominion’s,according to the proposals. Dominion’s proposal calls for initialservice to begin in 2005, but O’Connor said that DEGT’s expansionwould be completed and ready in 2002.

“We have several favorable differences, and Duke Energy’scredibility brings something to the table, too,” O’Connor said.”This project is consistent with the growth that we planned when webought the East Tennessee system, and we knew that going in.”

DEGT purchased the East Tennessee pipeline system from El PasoEnergy for $386.3 million in stock in January, extending the reachof its 9,220-mile Texas Eastern Transmission Corp. (Tetco)pipeline. O’Connor said the long-term plan was always to expand theEast Tennessee mainline between the Patriot extension and Tetco togive Patriot extension customers an additional natural gas supplyoption.

DEGT’s Evans said that the extension would “result in a 30%increase in East Tennessee’s peak-day delivery capability by 2002.”

Formal shipper meetings are scheduled by DEGT in the next twomonths, concluding with a binding open season for capacity in thePatriot extension. Following the open season, DEGT would make itsfiling with the Federal Energy Regulatory Commission by the end ofthe first quarter 2001.

East Tennessee Natural Gas owns and operates two mainlinesystems in central Tennessee that converge near Knoxville andextend to a point near Roanoke, VA. The system has a current designcapacity of more than 700 MMcf/d and provides services to 40 localdistribution companies and 16 industrial companies in the region.

DEGT manages 12,000 miles of natural gas pipelines, includingEast Tennessee, Tetco, Algonquin Gas Transmission, and with otherpartners, Maritimes & Northeast Pipeline.

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.