Dominion spends $253M on W Virginia gas expansion

AP News
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Posted: Dec 16, 2009 7:05 PM

Power company Dominion Resources said Wednesday it will spend $253 million to upgrade a network of natural gas pipelines in West Virginia that was never designed to handle the gas bonanza that has been uncovered in the region.

Large portions of the state sit on top of the Marcellus shale, where a massive deposit of natural gas that touches five states is locked in tight rock formations.

Dominion, which operates one of the largest natural gas storage systems in the country, said it has simply been overwhelmed in West Virginia.

The work will ease pressure within its system and increase the amount of gas that producers can move out of the state.

The expansion includes nine new units for compressing gas, 25 miles of new and replacement pipe, and two new processing plants in Pleasants and Lewis counties. Daily capacity is expected to increase approximately 50 million cubic feet to 280 million.

Richmond, Va.-based Dominion, which serves about 2.4 million customers on the East Coast, said drilling companies have been lobbying to move more natural gas out of the state.

The drive to use more natural gas, which is a cleaner burning fuel than coal, could create new jobs in the power sector. Dominion said that will certainly happen with the project in West Virginia.

Geologists have known for generations of the deposits, but the technology to retrieve it economically has only been developed in the last decade or so.

Gas is being recovered at such a rapid rate that volumes going into storage have reached record levels. Storage facilities all over the country, are at or near capacity.

Other shale deposits have been found from Texas to North Dakota.

The question now is what to do with a suddenly abundant and homegrown energy source.

This week, Exxon Mobil rattled the market when it announced it was making a $30 billion bid on the future of natural gas, buying XTO Energy, a big producer.

The West Virginia project is expected to be completed by the end of 2012.

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AP Writer Tim Huber in Charleston, W.Va. contributed to this report.