Dominion Resources, Inc. (D) has asked the Federal Energy Regulatory Commission (FERC) to start pre-filing process for its Appalachian Gateway Project. The proposed project will transport natural gas produced in West Virginia and southwest Pennsylvania to storage fields and pipelines in Pennsylvania.
The Appalachian Gateway project will cost around $600 million. Dominion expects to start construction work in 2011 and commence commercial operation in 2012. The project is fully subscribed by Marcellus Shale and other Appalachian natural gas producers. The total firm transportation delivery is estimated to be nearly 484,260 dekatherms of natural gas per day.
Dominion will build four new natural gas compressor stations and upgrade two existing compressor stations, which will add about 17,000 horsepower of compression capacity. Around 110 miles of new pipeline will be constructed under the project, which will start at West Virginia and end at Dominion and Spectra’s jointly owned Oakford facility in Delmont, Pennsylvania.
Virginia-based Dominion is a leading provider of electricity, natural gas and related services to customers in the energy-intensive Midwest, Mid-Atlantic and Northeast regions of the U.S. The company has the potential to drive bottom-line growth in the near term, attributable to deregulated generation fleet benefiting from higher realized energy price.
However, Dominion shares currently reflects a valuation commensurate with its earnings growth profile, lower business risks after the sale of the E&P businesses and changes in the Virginia regulatory framework. Hence, we maintain our Neutral recommendation on the shares of Dominion.
Read the full analyst report on “D”
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