CHARLOTTE, N.C., April 1, 2014 - Duke Energy (NYSE: DUK) and Piedmont Natural Gas(NYSE: PNY) this week will jointly issue a solicitation for proposals to build and operate a second major wholesale natural gas pipeline into North Carolina to meet growing demand for the fuel in the Carolinas and possibly surrounding states.
Duke Energy's increasing reliance on natural gas to generate electricity, coupled with Piedmont's growing customer demand, warrant investment in a new pipeline that would bolster reliability and diversity of natural gas supplies, the two companies state in their solicitation.
Currently, North Carolina is served primarily by a single major wholesale interstate natural gas pipeline that runs through the state.
A new pipeline would expand Duke Energy's and Piedmont's "access to competitive, secure, diverse and abundant supplies," and "enhance the reliability of future natural gas deliveries into the state," the solicitation says.
The two companies have "a strong preference" for a new pipeline route that provides geographical diversity relative to the path of North Carolina's existing major wholesale interstate pipeline, the solicitation states. Additionally, the new pipeline should allow for "future low-cost expansions with minimal environmental impact."
This past winter's extremely cold temperatures resulted in high natural gas demand throughout much of the nation, underscoring the need for additional natural gas pipeline capacity, utility industry observers have noted.
In addition, the construction of numerous natural gas-fired power plants nationwide in the wake of coal-fired power plant closures – due to environmental regulations and low natural gas prices – has significantly increased demand for natural gas.
Duke Energy has opened five new, cleaner-burning natural gas-fired power plants in North Carolina since 2011 to replace older, less efficient coal-fired power plants. Piedmont pipelines supply natural gas to all five plants.
Duke Energy also has proposed a new natural gas-fired power plant in South Carolina.
Natural gas-fired power plants release far fewer air emissions than do coal-fired power plants.
Duke Energy since 2005 has reduced company-wide carbon dioxide emissions by 20 percent, sulfur dioxide emissions by 84 percent and nitrogen oxide emissions by 63 percent by building natural gas-fired power plants, closing coal-fired power plants and installing additional emission control equipment.
Meanwhile, Piedmont's residential, commercial and industrial customer demand for natural gas continues to grow. Piedmont also has become a major supplier of natural gas to power plants operated by Duke Energy and other electric utilities.