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With energy future in flux, South Carolina studies expanded role for gas

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With energy future in flux, South Carolina studies expanded role for gas

As South Carolina debates its energy future, the state is studying its natural gas infrastructure and whether the fuel could help fill a gap in electricity supply created by the abandonment of the V.C. Summer nuclear power project.

State energy experts are waiting to see the outcome of recent events before committing to an expanded role for natural gas. Gas demand has boomed over the past decade. The three major pipeline systems that supply gas to South Carolina are heavily used. With these gas trends as background, the V.C. Summer project collapsed, and Virginia-based Dominion Energy Inc. plans to buy SCANA Corp., parent company to V.C. Summer developer South Carolina Electric & Gas Co.

"At one point ... we had indicated that [by 2020] about 42% of our ... energy capacity would be served by nuclear, and that's obviously going to change at this point," Maeve Mason, a senior energy specialist with the South Carolina Energy Office, said in an interview. "Natural gas, based on its relatively low prices at this point, could be included as an option to replace that capacity."

South Carolina's gas demand has increased as prices remained low and steady, greenhouse gas regulations took effect, and manufacturing and population grew, according to a 2016 South Carolina Energy Office analysis. The state's use of gas for power generation has tripled in the past decade, according to the U.S. Energy Information Administration.

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Mason is on a state-created gas committee studying existing infrastructure, the effectiveness of consumption-reduction efforts, expected demand, and impediments to growth. The committee was formed before the V.C. Summer expansion was scrapped and Dominion announced its plans for SCANA, but now those two issues are also factors.

Not a gas producer itself, South Carolina gets its gas mainly from the Transcontinental Gas Pipe Line Co. LLC and Southern Natural Gas Co. LLC pipeline systems. Both supply gas to a third major transmission line in South Carolina, Dominion Energy Carolina Gas Transmission LLC. Available transportation capacity on these lines, especially on the two bringing in gas from out of state, will be a key factor in whether the state can increase gas use in the near term.

Despite multiple expansion projects in recent years, Carolina Gas Transmission, or CGT, finds itself essentially fully subscribed these days after years of climbing demand, said Gary Alexander, director of customer service and business development.

"I feel like Paul Revere going around our system [telling customers], 'The system is tightening, the system is tightening,'" Alexander said. "We've had a story of tremendous success down here. Probably eight of the last 10 years we've set [throughput] records."

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Average daily throughput on CGT rose roughly 33% in the years between 2012 and 2016 and increased by about 148,000 Dth between 2008 and 2016, according to company data.

The latest CGT expansion was the $125 million Charleston project, which went into service March 1. It is the largest expansion in CGT's history, and all of the additional 80,000 Dth/d of firm transportation capacity is dedicated to South Carolina customers.

Given the demand growth, CGT has an eye on more expansion, Alexander said. Prospective customers have to work with both upstream suppliers and midstream gas movers to secure the resources they need, and the Marcellus Shale has become the place where customers want to get their gas. Upstream of CGT, Transco and other pipeline companies are expanding their systems.

"Our system is kind of a microcosm of what you see in the industry," Alexander said. "We've been an interstate pipeline for coming up on 12 years ... At [the beginning], the gas coming into our system was predominantly from Southern Natural Gas. Once you had the shale gas phenomenon, Transco [became] the much more liquid point."

Even with the attention on the Transco system, CGT's interconnect with Southern Natural Gas in South Carolina has also experienced high utilization during peak periods.

CGT also has an interconnect with Southern Natural Gas in Georgia, along with an Elba Island liquefied natural gas receipt point, but these are zoned differently from most of the rest of the CGT system. These receipt points may be less utilized than others, but the only physical delivery point in the zone is the Jasper County power plant, and there is a posted limit of 62,000 Dth/d of gas that can be moved from this zone into the main CGT zone in South Carolina. That 62,000 Dth/d is already fully subscribed, according to the company.

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CGT moves much of the gas on its system for South Carolina Electric & Gas. Out of the firm capacity at CGT delivery points in South Carolina, South Carolina Electric & Gas holds roughly 57%, with 456,427 Dth/d, according to S&P Global Market Intelligence data. Almost two-thirds of the gas that flows into South Carolina continues on to other markets, according to the EIA.

South Carolina's Mason said the gas committee is focused for now on evaluating existing infrastructure and determining whether there are areas that are currently underserved. The committee hopes to release a report in summer.

The V.C. Summer story has made the study more difficult. It has stirred up ire among legislators and the public. Before the project was dropped, expected costs had ballooned to at least $25 billion, compared with the $11.4 billion approved originally by regulators, and state lawmakers have since contemplated making changes to the way the state utilities commission operates. The Dominion deal itself is complicated by the politics of the abandonment and some analysts now doubt that it happens.

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"I think the dust needs to settle," Mason said. "We need to understand what utilities even exist after [the] legislative session, and how the public service commission may or may not be reorganized, and then get back into the planning."

"The future of gas is a little tenuous right now," Mason said of available pipeline capacity within the state. "It's too early to tell for sure, but prices of natural gas may indicate that there's some room for expansion in that realm of things in South Carolina."