Demand doesn’t drive need for tap
Published 1:21 pm Thursday, March 30, 2017
In the Jan. 5 edition of The Farmville Herald, as reported in “Demand drives access to gas,” it appears that Dominion is claiming that the memorandums of understanding (MOU) drafted between the Kyanite Mining Corp., the Buckingham County Board of Supervisors and Columbia Gas will somehow lead to a gas supply tap to their proposed Atlantic Coast Pipeline (ACP) and provide affordable gas for Kyanite, somehow opening up Buckingham and all of Virginia to a similar strategy of looking for customers and taps.
The real fact is that we don’t need the ACP to supply Kyanite since the existing Transco pipeline is already supplying abundant gas supply to the same region and can supply more.
If there were enough gas customers in Buckingham, Columbia would have enough business to justify a tap and could tap the existing Transco pipeline and provide gas at a cheaper cost compared to the proposed $5.5 billion ACP.
The Herald already reported that the two Buckingham MOUs are not binding between the parties, so the MOUs are simply documents of wishful thinking.
Columbia Gas will not pay for the tap without sure customer demand, and Kyanite is not enough.
After three years of looking for any customers to justify a tap, the only result has been the two non-binding MOUs offered forth to gain support for the pipeline. For commercial or industrial gas service, Dominion’s Aaron Ruby said it would cost the ACP $6-6.5 million just to build the tap and a metering and regulation station. Then, Columbia Gas would have to build its pipeline to wherever the customer is. Depending on the distance, this could total about $7-8 million just to serve a local industrial park.
Customers would have to pay for the price of natural gas, plus perhaps $500,000 per year in order to pay off the tap and local pipeline, plus a profit for Columbia Gas and the ACP.
This would likely require several million dollars per year in gas purchases to make it attractive to Columbia Gas and the ACP. To date, Buckingham County has not been able to guarantee anything close to that level of natural gas purchases in a local industrial park.
Thomas Hadwin, an energy utility consultant, notes that there is not enough concentrated demand in Buckingham and surrounding counties to make it profitable for Columbia Gas to provide the service.
If there was adequate demand, it would be cheaper for Columbia to tap the already existing Transco pipeline rather than tap the ACP.
Joseph Jeeva Abbate is the coordinator of Yogaville Environmental Solutions. His email address is firstname.lastname@example.org.