Atlantic Coast Pipeline LLC signs $400 million pipe manufacturing contract

Atlantic Coast Pipeline LLC, a consortium of four energy companies that has proposed a 550-mile natural gas pipeline to bring energy to Virginia and North Carolina, announced an agreement Wednesday totaling more than $400 million with Dura-Bond Industries to produce steel pipe for the project.

Pending approval by the Federal Energy Regulatory Commission (FERC), the Atlantic Coast Pipeline would run from Harrison County, W.Va., southeast through Virginia with a lateral extension to Chesapeake and then south through eastern North Carolina to Robeson County. If approved, construction is scheduled to start in late 2016.

Dura-Bond, which ACP LLC said it selected after an extensive bidding process, is scheduled to produce the pipe at its Steelton, Pa., mill beginning late 2015 through March 2017. The company plans to hire about 150 employees at the mill to run a second shift of union workforce to meet the schedule.

Producing the pipe, ranging from 30 to 42 inches in outside diameter, represents the largest single order in Dura-Bond’s history, company Vice President Jason Norris said in a statement.

“We are extremely pleased with such a large pipe order, and are proud that the Atlantic Coast Pipeline partners have the faith and trust in us,“ he said. “Since 2006, we’ve produced nearly 200 miles of pipe for Dominion and are excited to secure this tremendous order.”

Diane Leopold, president of Dominion Energy, the natural gas division of Richmond-based Dominion Resources, described Dura-Bond as one of the nation’s premier suppliers of gas transmission pipeline. The company has been a long-term supplier of pipe and pipe coating for Dominion’s gas transmission business since the 1970s. “This contract alone will provide significant economic growth to the region, beyond cleaner air, lower customer bills and jobs,” Leopold said in a statement.

The ACP joint venture reached the agreement with Dura-Bond before FERC approval because of the long lead time needed to buy raw materials and to get a guaranteed production schedule for such a large amount of new pipe. ACP expects to file its FERC application late this summer, receive its FERC certificate in the summer 2016 and begin construction shortly thereafter.

Jim Norvelle, a spokesman for Dominion Energy, said via email that there is a cancellation clause in the agreement “that we believe protects both Dominion and Dura-Bond.”  He noted that Atlantic Coast Pipeline joint venture is not the only company looking to build new infrastructure, “so there is a growing market for both the steel and pipe.”

The pipeline, which has drawn strong opposition from property owners and environmental groups, could be in service by late 2018, according to Dominion.
Atlantic Coast Pipeline LLC involves four major U.S. energy companies – Dominion, Duke Energy, Piedmont Natural Gas and AGL Resources. The joint venture partners plan to build and own the $4.5 billion-to-$5 billion pipeline, which they say would help meet the growing energy needs of Virginia and North Carolina by providing direct access to the natural gas production in the Marcellus and Utica shale basins of West Virginia, Pennsylvania and Ohio.

In other news on the natural gas front, Dominion Resources has closed a transaction to acquire Carolina Gas Transmission (CGT) from Scana Corp. for about $492.9 million. CGT owns and operates nearly 1,500 miles of FERC-regulated interstate natural gas pipeline in South Carolina and southeastern Georgia.