Piedmont Turns to Marcellus to Supply U.S. East Coast After Slow Third-Quarter 2014

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Natural gas services provider Piedmont Natural Gas Company (NYSE:PNY) (Charlotte, North Carolina), which primarily serves North Carolina, South Carolina and Tennessee, reported mixed results in third-quarter 2014, as seasonal slowness and expenses offset gains from customer growth, new rates and stronger transportation services. Piedmont reported a $7.34 million net loss for the quarter, compared with a $2.29 million net loss for the third quarter of 2013.

As part of its North American Oil & Gas Pipelines Project Database, Industrial Info is tracking $38 million in projects related to the construction of a pipeline in Anderson County, South Carolina, that will run from the Anderson Compressor Station to Duke Energy's W.S. Lee Steam Station. The 1.5-mile, 20-inch-diameter pipeline is designed to transport up to 75 million standard cubic feet per day of natural gas, and it will feature a compressor station with a 2,200-horsepower, engine-driven compressor gas package.

View Project Report - 300171068 300171095
View Plant Profile - 3125426 1011902 1083316

Total operating revenues stood at $164.19 million, an increase of less than 1% from the same period last year. Piedmont saw a 14% increase in its customer base during the quarter, especially in North Carolina and Tennessee, where the company also benefited from new rates. However, the company reported an overall dip in amounts due from customers, as well as more than $3 million in higher regulatory expenses and payroll and incentive plan accruals. Piedmont also saw a $3 million increase in net interest expenses following a drop in allowance for funds used during construction.

"Due to the seasonal nature of our business, we typically experience losses during the summer months that make up our third quarter," said Thomas E. Skains, the chairman, president and chief executive officer of Piedmont, in a conference call. "We were pleased to see continued customer growth during the quarter, with the addition of more than 3,650 new customers, a 14% improvement from last year. Year to date, we've added more than 11,600 customers, which is a 16% improvement."

Piedmont's $530 million capital expenditure program for full-year 2014 includes $295 million for system integrity, $195 million for customer growth, and $40 million for joint venture contributions. Full-year capital expenditures for 2015 and 2016 are expected to total $555 million and $575 million, respectively.

Piedmont executives announced that the company will take a 10% ownership stake in the 550-mile Atlantic Coast Pipeline, which is designed to transport up to 1.5 billion cubic feet per day of natural gas from the Marcellus and Utica shales to Virginia and North Carolina. The pipeline, which is estimated to cost between $4.5 billion and $5 billion, owned by four companies: Piedmont, Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia) (45%), Duke Energy (NYSE:DUK) (Charlotte, North Carolina) (40%) and AGL Resources (NYSE:GAS) (Atlanta, Georgia) (5%).

Construction on the Atlantic Coast Pipeline is expected to begin in late 2016, and it is expected to go in service in November 2018. The project will require approval from the U.S. Federal Energy Regulatory Commission, which Dominion will seek to secure by summer 2016. It is supported by 20-year customer contracts with six customers: Piedmont, Duke Energy Carolinas, Duke Energy Progress, Virginia Power Services Energy, Virginia Natural Gas and PSNC Energy.

"The economic fundamentals [of the Atlantic Coast Pipeline] are assisted greatly by the fact that Marcellus gas-supply pricing is extremely depressed in relation to the basis pricing for natural gas delivery services along the East Coast," Skains said in the conference call. "So when you look at today's East Coast prices, somewhere in the $4 range, and then look at the Marcellus in the $2 range, you can see the pricing signals being sent for infrastructure--to get those low-cost gas supplies to market."

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.