Atlantic Coast Pipeline Update- New Pipeline Proposed for Virginia

A new pipeline is being proposed to be built in Virginia. It is called the Atlantic Coast Pipeline, ACP for short, and it is being sponsored by Dominion Virginia Power, AGL Resources (the parent company of Virginia Natural Gas), Duke Energy, and Piedmont natural Gas. The pipeline is designed to bring gas in from the cheaper Marcellus Shale in West Virginia and western Pennsylvania to markets in Virginia and North Carolina. A project overview map can be seen on Dominion’s website at the below link:

The pipeline will run through a large portion of Columbia Gas of Virginia’s territory, though CGV has not committed as a shipper on the pipeline as of yet. Virginia Natural Gas will have a 70 mile spur that will run through Suffolk and Chesapeake, VA. The added expected capacity at VNG’s citygate will be about 75,000 Dth/ day. The pipeline will have total capacity of 1.5 Bcf/day, and of that 1.3 Bcf/day is currently committed between the 4 founding shippers. There is about 60,000 Dth/day that is not committed and does not have a first right of refusal associated with it. The pipeline will be fairly easy to expand to a total capacity of 2 Bcf/day.

Receipt point pricing in West Virginia is expected to be similar to where Dominion South pool trades, which is typically well under Columbia Appalachia pricing. The founding shippers are paying a demand rate of $1.07 per Dth, which when you factor in the reduced receipt point costs, would make this pipeline much cheaper for accounts behind CGV where TCO or Transco Z-5 are their only pipeline options. This would be a more expensive option for those accounts behind VNG where they are already getting to take advantage of discounted pricing off of DTI.

Enspire Energy attended a recent meeting in Chesapeake with the business development person for ACP, Lyle Henry. The pipeline is looking to engage industrial accounts who may have an interest in looking at contracting for capacity. Some questions will still need to be answered, including how the pipeline plans on handling daily balancing options for industrials. While there are no planned interconnects with CGV’s system at this time, certain large industrials might want to talk to ACP about looking at expanding deliverability at Emporia, which may provide deliverability to market area #34.

The current timeline for ACP is to be operational for gas deliveries for November 2018. Once completed, this pipeline will substantially increase deliverability in Virginia, and should have the effect of reducing basis pricing overall for the state.