HOUSTON, Oct. 23, 2001 — The construction of Duke Energy’s Patriot Extension pipeline project is expected to create a positive economic impact of about $11 million for Carroll, Patrick and Henry counties in southwest Virginia, according to a study conducted by the international consulting firm PricewaterhouseCoopers.
The study, prepared in conjunction with Merrimack Energy Group for Duke Energy, also estimates that post-construction (after 2004) economic benefits could potentially reach $19 million annually for the three counties.
“The study demonstrates that the economic benefits to this tri-county region are substantial during construction of the pipeline and that economic development opportunities will increase after the line is in service,” said Rick Smith, a director in Duke Energy Gas Transmission’s (DEGT) pipeline engineering area and the project director for Patriot.
“To further enhance economic development efforts, Duke Energy has committed in writing to install taps at no cost to all of the counties that a major segment of the pipeline traverses,” Smith added. “We are working with these county officials to select tap locations that will be of the most value to each county’s ongoing economic development efforts.”
A copy of the study is on the Patriot Extension web site, http://www.patriotextension.com.
The Patriot Extension will begin in Wythe County, cross Carroll, Patrick and Henry counties and a small portion of Floyd County before ending in Rockingham County, N.C. This new pipeline, and the expansion of the company’s East Tennessee Natural Gas (ETNG) system, comprises the $289 million Patriot project currently under review by the Federal Energy Regulatory Commission (FERC).
Seven natural gas shippers, representing electric power generators, marketers and local distribution companies, have committed to 87 percent – or 446 million cubic feet per day (MMcf/d) – of delivery capacity under long-term contracts. These shippers will be served by the Patriot Extension and expansion of the existing ETNG system.
Because of the use of local labor, right of way payments made and the ripple effects of other spending during the construction phase in 2002 to 2003, incomes of Carroll, Patrick and Henry county residents collectively are estimated to increase by almost $11 million. The report also finds that spending at local businesses and tax collections would increase significantly during this period, by more than $8 million and $700,000, respectively. Most of the estimated increase in taxes is from the property taxes on the value of the pipeline, which will be paid by Duke Energy directly to each county.
The study is based on standard economic forecasting models and the actual experience of communities where natural gas transmission pipelines have been recently constructed, such as the Maritimes & Northeast Pipeline that Duke Energy and other companies constructed in the late 1990s in New England and Canada. Based on these models, the study forecasts that once construction is complete and the pipeline is in service, the long-range economic benefits resulting from natural gas availability for the tri-county region could result in:
* increased annual earnings of $19.4 million,
* increased employment of more than 400 individuals,
* increased annual spending on goods and services of $12.4 million
* increased annual revenue for local governments of $5.6 million
As the filing entity for this Duke Energy project, ETNG is asking FERC for a final certificate by next spring to enable ETNG to begin construction next summer to meet the initial May 1, 2003, in-service date. Once approved by FERC, the proposed Patriot project will evolve in three phases, initially having the capacity to transport 130 MMcf/d, increasing to 310 MMcf/d in November 2003 and eventually transporting 510 MMcf/d in January 2004.
“We are pleased about the significant economic potential that Patriot will bring to the region,” said Greg Harper, vice president of ETNG. “By introducing a new energy supply to southwest Virginia, Patriot will provide one of the key infrastructure fundamentals for economic development.”
DEGT is the Houston-based Duke Energy business unit responsible for the company’s interstate natural gas pipeline operations. DEGT owns and operates 12,000 miles of interstate natural gas pipelines known as Texas Eastern Transmission, LP; Algonquin Gas Transmission Co.; East Tennessee Natural Gas Co.; and with others, owns Maritimes & Northeast Pipeline and the Gulfstream Natural Gas System. Together, these companies transport 8 percent of the natural gas consumed in the United States.
DEGT also owns natural gas salt cavern facilities in Texas and Louisiana with a total storage capacity of 24 billion cubic feet, making it one of the largest owners of high-deliverability salt cavern storage facilities in the United States. The company is also jointly developing a natural gas storage facility in the salt caverns located at Saltville, Va. The facility, which will provide 11.7 billion cubic feet of natural gas storage capacity, will support the growth of the ETNG system in Southwest Virginia and provide an opportunity for Virginia producers to move their supplies.
Duke Energy, a diversified multinational energy company, creates value for customers and shareholders through an integrated network of energy assets and expertise. Duke Energy manages a dynamic portfolio of natural gas and electric supply, delivery and trading businesses generating revenues of more than $49 billion in 2000. Duke Energy, headquartered in Charlotte, N.C., is a Fortune 100 company traded on the New York Stock Exchange under the symbol DUK. More information about the company is available on the Internet at: www.duke-energy.com.