Duke Energy and Piedmont Natural Gas announced an interstate pipeline project Tuesday to deliver natural gas into North Carolina, opening the spigot to economically distressed rural counties where many residents and businesses lack access to the cheap fuel.
The Atlantic Coast Pipeline will run near Interstate 95, delivering the natural gas from fracking operations in the Utica and Marcellus shale basins in West Virginia, Ohio and Pennsylvania, home to some of the world’s best-known natural gas deposits.
The 550-mile project, the final third of which will cross through North Carolina, will be only the second major interstate gas line into the state. But it will be the first dedicated to delivering fuel from the shale gas boom that has driven down natural gas costs and transformed the nation’s energy landscape.
“We think of this pipeline as something that will benefit this region for decades,” Duke CEO Lynn Good said in a phone interview. “We see natural gas as being an increasing part of the fuel supply to power not only electricity but industry as well.”
Duke and Piedmont had announced plans in April to pick a pipeline operator to deliver natural gas to run Duke’s newly built power plants and to satisfy Piedmont’s growing customer demand.
On Tuesday, the two Charlotte companies selected Richmond, Va.-based Dominion Resources from five bidders to design and build the project. Dominion will narrow down a final route by next summer and will negotiate with hundreds of property owners to bury the pipeline on their land.
In North Carolina, Dominion will need 110 feet of access for construction and a 50-foot corridor for the buried line. The pipeline operator will require permanent maintenance access and will prohibit buildings and trees in the easement.
Review and approval from the Federal Energy Regulator Commission is not expected to hold up the project, but haggling over money with landowners could take several years, said Mark Bridgers, a pipeline construction consultant and a principal at Continuum Advisory Group in Raleigh. Ultimately, an interstate pipeline operator can resort to eminent domain to seize the land from uncooperative property owners and pay them a value set by a judge.
“The issues are going to come down to the easement and the rights of way,” Bridgers said. “That’s going to be the biggest obstacle to get all that lined up.”
Even as some resent the pipeline on their land, others will clamor for it. Parts of Johnston County are ripe for industrial development but sit more than 10 miles from the nearest natural gas access point, making the parcels unattractive to potential developers, said Chris Johnson, economic development director for Johnston County.
“From an industrial standpoint, this really picks up and opens up eastern Johnston County,” Johnson said. “I’ve got developable and marketable land that I’m trying to market to site consultants.”
In Johnston County, one of eight North Carolina counties included in the proposal, officials expect the pipeline will lead to feeder lines to existing industries and undeveloped sites they say are poised to accommodate new businesses.
“Otherwise, it would be like having an interstate without any on- or off-ramps,” said Ted Godwin, a Johnston County commissioner. “When we talk to industrial recruiters, (natural gas) is one of the first things they ask about.”
Duke Energy will be the primary customer of the shale gas, but the pipeline will be equipped with three interconnections in Johnston, Sampson and Robeson counties to divert the natural gas into Piedmont’s distribution system to be delivered to the utility’s customers. The company will market the gas availability aggressively to attract new industries, said Piedmont CEO Thomas Skains.
“Piedmont will do everything we can to market the natural gas to new customers along this pipeline route,” Skains said.
However, the line will not be bi-directional and is not expected to accept shale gas drilled in North Carolina when the state’s fracking moratorium is lifted next year.
Lee, Chatham and Moore counties, the focus of potential fracking activity here, are closer to existing in-state lines owned by Piedmont and PSNC Energy than to the Atlantic Coast Pipeline, Skains said.
The line is being designed to bring gas into the state, not out of the state, as demand for natural gas here grows.
Duke and its Raleigh subsidiary Duke Energy Progress have built five natural gas power plants since 2011 in response to falling natural gas prices and rising concerns about potential federal regulation of greenhouse gas emissions caused by burning coal. Duke is building a sixth gas-fueled power plant in South Carolina to begin operating in 2018, the same year that the Atlantic Coast Pipeline is scheduled to start flowing natural gas here.
The pipeline, which will terminate in Robeson County, will be jointly owned by four energy companies. Dominion and Duke, two of the nation’s largest utilities, will own 45 percent and 40 percent of the project, respectively. Piedmont will own 10 percent, and 5 percent will be owned by AGL Resources, an Atlanta energy company that owns Virginia Natural Gas, one of the utilities that will take gas from the pipeline.
Six utilities and related companies will buy most of its capacity: Duke Energy Carolinas, Duke Energy Progress, Virginia Power Services Energy, Piedmont, Virginia Natural Gas and PSNC Energy. Remaining capacity on the line will be made available to interested businesses and industries.