North Carolina could soon be deluged with cheap and abundant natural gas from the Marcellus Shale through a major pipeline expansion that could dampen urgency to incubate a home-grown fracking industry.
Proposals to build a new interstate transmission line by late 2018 could double the volume of natural gas flowing into North Carolina from gas-producing regions. Duke Energy’s natural gas-burning power plants would be the primary customers; but the fuel would also be available for local industrial and manufacturing operations to buy.
The multibillion-dollar pipeline project could transform rural counties, creating temporary construction jobs and boosting property tax revenues for cash-strapped governments. Over the long term, local officials hold out hope that the influx of cheap fuel will spur industrial development in Eastern North Carolina, one of the most economically distressed regions of the state.
“This would solve my problems,” said Chris Johnson, economic development director for Johnston County.
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“Obviously natural gas is the energy of the future, and connecting to natural gas across Johnston County is in the long-range goals for economic development,” Johnson said. “As industries request information, that is one thing they’re asking for: Does the site have natural gas?”
The prospects for local shale-gas exploration, which is under moratorium until 2015 in North Carolina, are less clear. Access to an interstate pipeline could reduce barriers to entry for local energy exploration, but local fracking operators still may not be able to compete with established upstream producers.
“This will impede exploration in North Carolina,” said Mark Bridgers, a pipeline construction consultant and principal with Continuum Advisory Group in Raleigh. “Simply building a pipeline doesn’t get around the fact that most of the other infrastructure doesn’t exist.”
Two pipeline operators have publicly said they are proposing a transmission line into North Carolina to meet a surge in demand for natural gas here. The proposals were due this past Wednesday in response to a joint solicitation issued in April by Charlotte-based utilities Duke Energy and Piedmont Natural Gas.
Dominion Resources has proposed a transmission line along the Interstate 95 corridor from West Virginia to the Lumberton area in Robeson County. The Richmond, Va.-based company has sent letters to more than 1,000 North Carolina landowners to alert them of coming surveying activity required to select a transmission route.
The I-95 path is “very preliminary,” said spokesman Jim Norvelle, and could be diverted to avoid ecologically or culturally sensitive areas. As proposed, it would run underground through nine North Carolina counties, including Johnston, Wilson and Nash, and it could include lateral extensions to Fayetteville and Raleigh.
Spectra Energy of Houston has proposed a 427-mile buried line starting at compressor station 220 in Bedford County, Penn., and ending in Robeson County. The $4 billion project would cross through seven North Carolina counties, including Wake, Johnston and Harnett.
Additionally, Pittsburgh-based EQT Corp. and Juno Beach, Fla.-based NextEra US Gas Assets are proposing a 330-mile Mountain Valley Pipeline from West Virginia to southern Virginia, on the North Carolina border, with an option to extend the line into North Carolina.
“We know there’s a hunger out there for low-cost natural gas from the Marcellus Shale,” Dominion’s Norvelle said. “We’re just looking for a way to get it to customers.”
A transmission pipeline would typically require a 50-foot-wide easement for access and maintenance. The operator selected by Duke and Piedmont would negotiate easement leases with landowners along the route, with legal recourse to eminent domain power as a last resort.
Pipelines that create new markets for shale gas and promote drilling will not be popular with critics of fracking. The term refers to extracting gas from prehistoric shale rock formations by cracking the rock with a subterranean cocktail of high-pressure water, sand and chemicals.
“There's no way a new gas pipeline could help North Carolina's environment or future generations,” said Elizabeth Ouzts, director of Environment North Carolina.
“It’s just bad news for our air, water and public health any way you slice it,” Ouzts said. “Major investment in a brand new pipeline means more fracking, which contaminates water and increases air pollution in local communities and locks us in to more global warming pollution.”
Could face resistance
The oft-postponed Keystone XL Project pipeline offers a clue to the debate ahead for the proposed East Coast natural gas line when it’s submitted for review to the Federal Energy Regulatory Commission.
The 875-mile Keystone project, which would carry oil from Canada to Nebraska, generated 1.5 million public comments – 99 percent of them form letters sponsored by nonprofit advocacy groups, according to a January report issued by the U.S. State Department.
The report also noted that the Keystone project would bring a significant boost in property taxes, raising revenue more than 10 percent in 17 of 27 U.S. counties that host the pipeline. “Operation of the proposed project is not expected to have an impact on residential or agricultural property value,” the report said.
Duke plans to select a project late this year. The utility has doubled North Carolina’s appetite for natural gas in the past five years as the company shuts down aging coal-burning power plants that emit greenhouse gases, mercury and other pollutants.
Duke and Raleigh-based Progress Energy, acquired by Duke two years ago, have together built five natural gas-fueled power plants since 2011. Duke is planning a sixth in South Carolina for a combined total exceeding 4,000 megawatts, equivalent in power output to about four nuclear reactors.
The shift is being driven by the nation’s shale gas boom and by concerns about greenhouse gases and climate change. Natural gas emits about half the carbon dioxide of coal and a fraction of other pollutants.
Piedmont, the state’s biggest natural gas utility, is the supplier of natural gas to the new power plants, and the two Charlotte utilities are soliciting extra capacity of up to 900 million cubic feet of natural gas a day. North Carolina’s average daily usage is not much higher – 1.2 billion cubic feet a day – but gas usage in the state can more than double the average volume during extremely cold weather.
Another potential source for North Carolina’s share of Marcellus Shale gas is Houston pipeline operator Transco, which owns the existing 1,800-mile line running from the Gulf Coast to the Northeast. Transco is planning to reverse directional flow in its system so that gas from Pennsylvania and West Virginia could be brought to North Carolina and as far south as Alabama.
The $3 billion Transco project is expected to be submitted for approval to the Federal Energy Regulatory Commission in February 2015.
Fracking potential iffy
The new pipeline built for Duke and Piedmont could sprout lateral lines to serve local industries, and it could potentially accept gas intake from local producers. But interconnection is far from guaranteed.
“This proposed project is designed to bring gas into the state; there’s no contemplation of gas being transported out of the state,” said Spectra spokesman Arthur Diestel. “Interstate pipelines are required to transport natural gas on a nondiscriminatory basis, (but) the gas must meet quality criteria, there must be capacity available on the pipeline, and the shipper must meet all other contractual requirements.”
Bridgers, the pipeline consultant, said any hope that the interstate pipeline would facilitate local fracking is illusory. The substantial cost of building gathering lines, compressors and other heavy equipment will outweigh the economic value of the relatively small amount of natural gas in North Carolina, he said.
“The real gain is in industry,” he said. “It could open up industrial and commercial development because they could convert over from propane to (cheaper) natural gas.”