$300M+ investment to lower natural gas prices

$300M+ investment to lower natural gas prices

An investment of over $300 million in a new natural gas pipeline serving northern Ohio is being planned by Columbus-based North Coast Gas Transmission LLC.

Andy Lang, president of North Coast Gas Transmission LLC, was joined by Alan Schriber, chairman of the Public Utilities Commission of Ohio (PUCO), at a news conference in Toledo. The pipeline will run from Defiance to near Parma, then to gas storage facilities in the Canton area. It will be constructed using existing utility corridors where possible and will provide access to natural gas supplies from all western North American basins.

“Currently, more than 90 percent of Ohio’s natural gas supply comes from the Gulf of Mexico region, and recent natural disasters in that area have hindered distribution and production of natural gas,” Schriber stated. “The PUCO strategy has been to encourage development and further diversification of our state’s energy infrastructure. North Coast coming forward with its new pipeline proposal is an example of this strategy at work.”

The pipeline will provide northern Ohio businesses and consumers with access to natural gas from the Chicago Hub. This hub serves as an aggregation point for virtually every natural gas-producing basin in the United States and western Canada. Ohio’s natural gas providers will have the ability to transport natural gas on the North Coast pipeline to distribute to their end users. Natural gas from the Chicago Hub can be purchased at a significant discount to gas from the Gulf Coast region, according to North Coast Gas Transmission.

“North Coast is committed to serving Ohio and providing Ohio consumers and businesses with reliable and diverse natural gas sources,” Lang stated. “We believe this pipeline will boost economic development in the region as well as reduce Ohio’s dependence on Gulf region natural gas sources.”

The project is in its beginning phases, and the exact pipeline route will be determined through a review process conducted with Ohio regulatory authorities. Site evaluations and public meetings will start later this year in conjunction with the certification process. Construction on the project would begin in late 2007, with completion tentatively scheduled for late 2008.

Schriber said the PUCO is not at the point of ruling on the merits of the North Coast proposal, but is encouraged by the private sector’s willingness to investigate options for expanding the state’s energy supply. In an interview with Toledo Business Journal, Lang discussed a number of issues. While the pipeline will run south of Toledo from Defiance to Parma, the company is examining the option of running a trunk line north to service Toledo. “This would take the $300-plus million investment closer to the $350 million level,” Lang explained.

Lang also shared his outlook for natural gas supplies during the next several years. “There is significant supply in the western US and in western Canada. A new pipeline from the west to Chicago is being planned for construction in 2008,” he stated. “In addition, new natural gas supplies from Alaska will move into this market. I am very optimistic about future natural gas supplies.”

Currently, northwest Ohio is only able to receive natural gas from the gulf coast. The new pipeline will enable supplies from the western US and Canada to enter the market. Prices for natural gas from western states have been 10 to 20 percent below gulf coast prices. “More pipeline capacity will provide more competition from suppliers, which will help mitigate any potential run-up in prices,” Lang concluded.

North Coast Gas Transmission LLC is a subsidiary of Somerset Gas Transmission Company LLC and began operating its Ohio pipeline in September 1998. Currently, it provides natural gas transportation service for a range of local distribution companies, endusers, and market aggregators in northern Ohio.

Copyright Telex Communications, Inc. Apr 01, 2006

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