Dominion Adds Gas Pipeline Links, Storage Capacity with Acquisition of Mid-Atlantic LNG Facility
$217 Million Purchase of Cove Point LNG
Limited Partnership Expected to Close in September
RICHMOND, Va. - Dominion (NYSE: D)
has agreed to pay $217 million to acquire Cove Point LNG Limited Partnership,
owner of the nation's largest liquified natural gas import facility, which federal
regulators have approved for reactivation next spring.
The facility on the Chesapeake Bay near Baltimore will provide
5 billion cubic feet of storage capacity and daily send-out capacity of 1 billion
cubic feet. The terminal is linked by its own pipeline to the major Mid-Atlantic
gas transmission systems of Transcontinental Gas Pipeline, Columbia Gas Transmission
and Dominion Transmission. (View
a map of Cove Point. A Powerpoint
slide also is available.)
The facility is already 100 percent subscribed with agreed
rates approved by the Federal Energy Regulatory Commission. An additional 2.5
billion cubic feet of storage capacity is planned and expected to be in service
by 2004, which is also subscribed.
Cove Point will receive and store natural gas shipped to
the U.S. in liquified form, where it is off-loaded, stored for subsequent gasification
and then delivered.
Dominion expects to complete the purchase from The Williams
Co. (NYSE: WMB) in September following review by federal regulators under the
Hart-Scott-Rodino Act. FERC approved full reactivation and expansion of the
dormant facility last autumn. Additionally, between $18 million and $28 million
in site development costs expected to be incurred between now and closing will
be paid by Dominion.
Thos. E. Capps, chairman, president and chief executive officer,
said:
"Cove Point Terminal is a timely, well-located addition
to our $35 billion base of assets that will be accretive to earnings when it
enters service.
"It will grow in value by linking natural gas supplies
from non-U.S. sources with high-growth natural gas markets in the Mid-Atlantic.
It is also positioned to serve existing Dominion Energy gas-fired generation
facilities, including Possum Point, Remington and Ladysmith, as well as Dominion's
Fairless Works project now under development in Pennsylvania.
"As stewards of one of America's largest and safest
nuclear programs, we'll bring to Cove Point our high safety standards and our
demonstrated success in operational security. We look forward to working with
the U.S. Coast Guard and other federal and state agencies to ensure its long-term
safe and secure operations."
Dominion will ultimately finance the acquisition with a combination
of debt and additional share issue. The facility, which now employs 25 people,
will employ 65 people when it enters operations. It originally entered service
in the early 1970s. It was taken largely out of service more than 20 years ago
and purchased by Williams from Columbia in 2000. When Dominion acquires the
facility, it will be operated by Dominion Energy.
Dominion
is one of the nation's largest energy companies.
This release contains forward-looking statements
that are subject to various risks and uncertainties. Discussion of factors that
could cause actual results to differ materially from management's projections,
forecasts, estimates and expectations may include factors that are beyond the
company's ability to control or estimate precisely, such as estimates of future
market conditions, estimates of proved and unproved reserves and the behavior
of other market participants. Other factors include, but are not limited to,
weather conditions, economic conditions in the company's service area, fluctuations
in energy-related commodity prices, trading counterparty credit risks, risks
associated with successfully executing the telecommunications business plan
and other uncertainties. Other risk factors are detailed from time to time in
the company's Securities & Exchange Commission filings.
