Capitol Energy Ventures, UGI Energy partner for new $1bn natural gas pipeline

WGL Holdings subsidiary, Capitol Energy Ventures Corporation has partnered with UGI Energy Services and Inergy Midstream to jointly build and market a 200-mile interstate pipeline in the US state of Pennsylvania.

The Commonwealth Pipeline is expected to cost $1bn and will be used to transport 800,000 dekatherms of natural gas per day from Pennsylvania’s Marcellus Shale to New York and New England markets.

Capital Energy Ventures and UGI Energy Services are expected to execute precedent agreements to become anchor shippers on the pipeline.

WGL Holdings chairman and CEO Terry McCallister said this agreement is a testament to the company’s commitment to invest in, and maintain, the pipeline infrastructure.

"The expansion and reinforcement of our regional natural gas delivery system will benefit all those residential and commercial customers who rely on natural gas," added Terry.

The pipeline will start in Lycoming County, Pennsylvania and run between Harrisburg and Lancaster by crossing the Susquehanna River to York.

It will then extend south from the terminus of Inergy’s Marc I line in Lycoming County and connect the central and eastern Pennsylvania accessing markets in Baltimore and Washington D.C.

The 30-inch pipeline will connect local markets to Marcellus and reduce transportation costs for customers who majorly procure natural gas from the Gulf coast.

The pipeline is also expected to link with a number of interstate pipelines along its route, allowing greater supply diversity to the mid-Atlantic region and exploring the natural gas produced from the Marcellus.

Construction could begin in 2014 and the pipeline is scheduled to go into service in 2015.

A non-binding open season for the project is expected to be announced this month for shippers interested in acquiring capacity on the proposed pipeline.

Inergy Midstream will construct and operate the pipeline while Vega Energy Partners will assist in marketing transportation capacity for the pipeline.

All the three sponsors will hold equal equity interests in the project company, formed to own the pipeline and equally fund the project.