A study commissioned by Duke Energy in support of subsidiary East Tennessee Natural Gas’ Patriot pipeline extension forecasts that natural gas demand in Virginia and North Carolina will grow by 410 Bcf over a 10-year period from 2000 to 2010 and that peak-day demand will increase by 1.5 Bcf/d, exceeding the new supply to be delivered by Patriot.

That should come as welcome news to some of Duke’s pipeline competitors, Transcontinental Gas Pipe Line, Columbia Gas Transmission and Dominion Transmission, which also are planning major pipeline expansions in the region (see Daily GPI, Aug. 21, 2001; Sept. 5, 2001 and Nov. 21, 2000).

East Tennessee’s 94-mile Patriot extension, which currently is being reviewed by the Federal Energy Regulatory Commission, would traverse Wythe, Carroll, Patrick and Henry Counties in Virginia and end at a connection with Transcontinental Gas Pipe Line in Rockingham County, NC. The $289 million project would deliver 510,000 Dth/d of additional gas to the region, including portions of southwestern Virginia that currently are without gas service, starting in May 2003. It includes an expansion of the East Tennessee mainline.

The project would go into service in phases, with 130,000 Dth/d available in May of next year, another 146,000 Dth/d in November 2003 and an additional 200,000 Dth/d in January 2004.

The study conducted by Salem, NH-based Merrimack Energy finds that the largest demand growth will come from new gas-fired power generation. Over the 10-year forecast period, peak power demand in the region to be served by the pipeline extension will increase by 2.3%, or about 13,000 MW. Incremental gas needs from the power sector are expected to grow to 308 Bcf in 2010. Traditional gas demand from residential, commercial and industrial customers behind local distribution companies also is expected to grow. Virginia LDCs reported that they will need 342 Bcf/year of gas by 2010, up from 286 Bcf in 2001. LDCs in North Carolina project needing 284 Bcf in 2010, up from 238 Bcf in 2001.

“Without additional gas infrastructure, such as the capacity provided by the Patriot Extension, regions of the Southeast could face limitations on pipeline capacity, which could limit the construction of new power generation options needed to meet market growth,” Merrimack concluded.

Currently 446,000 Dth/d of the proposed Patriot capacity is under contract with seven shippers, with the remaining 64,000 Dth/d currently unsubscribed. The shippers include LDCs (or affiliates) NUI Energy Brokers, Public Service of North Carolina and United Cities Gas, electric utility Carolina Power & Light, and merchant power companies Duke Energy Murray LLC, Duke Energy Wythe LLC and Henry County Power LLC.

Meanwhile, Piedmont Natural Gas took an equity stake in Dominion’s 200-mile, 600 MMcf/d Greenbrier Pipeline, which would extend from Dominion’s Cornwell Station near Charleston, WV, to a connection with Transco in Rockingham County, NC. Columbia has been in the hunt with its own Homestead expansion in the Tidewater area of southeastern Virginia and Maryland and northeastern North Carolina. And Transco is planning an expansion of its South Virginia Line (SVL) to serve demand growth in the region. None of the other projects have been filed with FERC.

While significant demand growth is projected, it seems that more than enough additional pipeline capacity is being planned. However, East Tennessee’s Greg Harper believes there’s enough demand growth to be spread out among several projects. “There’s a lot of market there,” he said. “I think each of the pipeline operators that are proposing projects is going to be able to capture different markets and still build their pipelines. We don’t see ours as the only pipeline that can go in this area.

“We already have our market signed so we’re not really competing against Greenbrier, Transco or Homestead. We have our market locked up. From what I understand, those other projects are pursuing their own markets and they’ve been different from what we’ve added. Greenbrier will serve power plants that are well to the east of us. Transco will serve demand along their own mainline. We are going after some new markets in Virginia.”

Harper said Duke expects to receive a preliminary determination on Patriot from FERC relatively soon and then an environmental review by mid-year.

He added that previous criticism of the East Tennessee project regarding its ability to serve demand from peaking power plants should be put to rest by Duke’s plans to expand the high-deliverability Saltville storage project in southwestern Virginia. Duke and NUI are planning a phased expansion of up to 10 Bcf of working gas capacity and 500 MMcf/d of deliverability. “High deliverability storage is what power generators like,” said Harper. He said the Saltville expansion is on file at the Virginia Corporation Commission and will be filed at FERC this year. Duke expects to have 0.5 Bcf of new storage capacity available this year and 4-5 Bcf of additional capacity from the project in the next two years followed by further expansions.

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