Price Tag Estimate for Constitution Natural Gas Pipeline Rises $50 Million

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Researched by Industrial Info Resources (Sugar Land, Texas)--Piedmont Natural Gas (NYSE:PNY) (Charlotte, North Carolina) now expects the Constitution pipeline project to cost $925 million, up by $50 million from the previous estimate, company executives said Tuesday.

Construction of the 124-mile pipeline is expected to begin this fall, with completion in the second half of 2016. The pipeline will carry up to 650 million standard cubic feet per day of natural gas from northeastern Pennsylvania to New York and New England. Piedmont Natural Gas holds a 24% stake in the joint venture project. Subsidiaries of Cabot Oil & Gas Corporation (NYSE:COG) (Houston, Texas), Williams Partners LP (NYSE:WPZ) (Tulsa, Oklahoma) and WGL Holdings Incorporated (NYSE:WGL) (Washington, D.C.) also have stakes.

Piedmont Chief Financial Officer Karl Newlin attributed the 6% increase to "fine tuning overall [of the] price estimates as we look to get moving on construction." Also, part of the labor contract for the project was rebid to account for increased costs, he said.

Meanwhile, he said, "things are going very well" on the 550-mile Atlantic Coastline Pipeline project, where Piedmont holds a 10% stake. Beginning in late 2018, the pipeline would bring up to 1.5 billion cubic feet of gas per day (BCF/d) from the Marcellus and Utica shale formations to power plants, homes and businesses in North Carolina and Virginia. Other stakeholders in the $5 billion project include Dominion Resources Incorporated (NYSE:D) (Richmond, Virginia), Duke Energy (NYSE:DUK) (Charlotte, North Carolina) and AGL Resources Incorporated (NYSE:GAS) (Atlanta, Georgia). Kickoff is set for first-quarter 2017. "Most of the concerns are questions that seem to stem from the proposed route the pipeline will take as well as the construction and mitigation measures we will employ," Newlin said.

Piedmont now estimates its total capital expenditures (capex) for 2015 will be $515 million, down $50 million from its previous estimate, and flat with its capex total in 2014.

The company reported a net loss of $8.3 million for its third quarter ended July 31, 2015, compared with a net loss of $7.3 million in the same quarter of 2015. Operation and maintenance expenses totaled $69.6 million in the third quarter, up by $1 million from the same quarter a year earlier. Operating revenues totaled $158.3 million, down 4%.

Chief Executive Officer Thomas Skains said the company typically registers a seasonal loss for the summer. Net income for the first three quarters of the fiscal year was $151 million, down 1% from the same period in fiscal 2014.

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