East Tennessee Natural Gas Company Is Poised to Begin Construction on Pipeline System

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). East Tennessee Natural Gas Company (ETNG) (Houston, Texas) is set to begin construction on the first phase of the Patriot Expansion Project. Construction on the $350+ million expansion project is scheduled to begin on November 1, 2002. The construction will be spread across the states of Tennessee, Virginia, and North Carolina.

The scope of the entire project will include approximately 85 miles of 24" & 20" diameter pipeline loop in Tennessee and Virginia and the replacement of 24.7 miles of 24" diameter pipeline in Virginia. ETNG will conduct hydrostatic testing on 77.3 miles of existing pipeline in Tennessee to increase the maximum allowable operating pressure of the pipeline. The extension portion (Line 3600) of the project will encompass the construction of 93.6 miles of new 24" diameter pipeline from Wytheville, Virginia, to interconnect with Transcontinental Gas Pipeline Corporation's (Houston, Texas) mainline near Eden, North Carolina.

Seven miles of new 16" diameter pipeline will be built to supply gas to a power plant owned by Henry County Power, LLC. ETNG will also increase compression facilities on its system by over 70,000 horsepower. The new compression will be a mixture of electric, internal combustion, and Taurus turbine units. Ten existing compressor stations will be expanded and five new stations will be constructed to house the new units.

ETNG selected Murphy Brothers Incorporated (East Moline, Illinois) as the prime contractor for the pipeline construction segment and Bi-Con Services Incorporated (Derwent, Ohio) for the compressor station work in the first phase. The first phase of the Patriot Project has a projected in-service date of May 1, 2003 and will provide 130 mmcf/d of natural gas service. The second phase will be completed in November 2003 and the figure will increase to 310 mmcf/d. The third and final phase will come into service in January 2005 and the figure again will increase to 510 mmcf/d.

ETNG conducted an open season from December 12, 2000 to January 12, 2002, which resulted in long-term agreements for firm transportation service with seven shippers totaling over 436 mmcf/d or approximately 87 percent of the Patriot Project's capacity. The capacity is under contract with a weighted average primary term of 19 years and a minimum term of 10 years. Of the seven companies to receive gas service, three are new electric generating plants owned by Henry County Power, LLC, Duke Energy Wythe, LLC, and Duke Energy Murray, LLC. The remaining four are Carolina Power & Light Company, NUI Energy Brokers, Inc., Public Service Company of North Carolina, Inc., and United Cities Gas Company.

ETNG is a division of Duke Energy (NYSE:DUK) (Charlotte, North Carolina) and operates a network of 1,129 miles of natural gas pipeline with a peak capacity of 700 mmcf/d. When the Patriot Project is completed this network will increase to 1,403 miles of pipeline. Duke Energy is involved in power generation, natural gas production & transmission, natural gas liquids production, and energy trading. Duke employs over 25,000 people worldwide and had revenues of 59 billion in 2001, which translated into $2.32 EPS on a weighted average of 833 million shares outstanding.