WGL Midstream to supply gas for Dominion’s Cove Point LNG project

WGL Holdings (NYSE: WGL), through its subsidiary WGL Midstream, announced Dec. 4 the execution of a gas sale and purchase, and capacity agreement with GAIL Global (USA) LNG LLC (GGULL) related to the Cove Point liquefied natural gas (LNG) export project in Maryland of Dominion Resources (NYSE: D).

GAIL Global USA is a subsidiary of GAIL (India) Ltd. (GAIL). Under this deal, WGL Midstream has agreed to sell up to 430,000 Dth/day of natural gas, for a term of approximately 20 years, commencing on the in-service date of the Cove Point LNG export facility. WGL expects that the majority of the natural gas would be purchased by WGL Midstream through an existing arrangement with Antero Resources Corp., a premier producer and the most active operator in the Marcellus and Utica Shale region.

“We look forward to WGL Midstream’s long-term relationship with GGULL which capitalizes on the growing supply of abundant natural gas from the Marcellus Shale producing region. This growing supply source has been providing clean burning natural gas to the Northeast and Mid-Atlantic regions of the United States and now will supply the country of India as well,” said Terry D. McCallister, Chairman and Chief Executive Officer of WGL Holdings.

B. C. Tripathi, Chairman and Managing Director of GAIL, said: “We are delighted to partner with WGL Midstream which is a part of a group that has a rich history of over 160 years in the natural gas supply business in the mid-Atlantic region. This agreement is another milestone towards GAIL’s efforts in the sourcing of LNG to meet the rising gas demand in the Indian market.”

Through the long-term agreement, WGL Midstream is GGULL’s sole supplier of a minimum of 340,000 Dth/day up to 430,000 Dth/day of clean and abundant natural gas through a full requirements contract over a 20-year period. WGL Midstream will make deliveries using transportation capacity released by GAIL through an asset management arrangement.

The existing arrangement between WGL Midstream and Antero consists of a firm sales agreement for 330,000 Dth/day, which will be used to serve GGULL. Under the arrangements, WGL Midstream will also have the option to acquire a 30% ownership interest in a 70-mile extension of an existing gathering pipeline system for an investment of $100m-$150m. The gathering system will support Antero deliveries to interstate pipelines serving the Mid-Atlantic market, and its expected in-service date is December 2015.

WGL Midstream engaged Vega Energy Partners Ltd., for the execution of these transactions. Vega will also play an ongoing role in the implementation of these contracts.

Headquartered in Washington, D.C., WGL Holdings is a leading source for clean and efficient energy solutions. Through affiliates and strategic relationships, it offers a diverse set of energy sources including natural gas, wind, and solar as well as a range of energy solutions – generation, storage, transportation, distribution, supply, and efficiency, with activities in 30 states. WGL Midstream is a wholesale energy solutions business, investing in and optimizing natural gas pipelines and storage facilities in the Midwest and Eastern United States.

GAIL is India’s leading natural gas company with a presence along the entire hydrocarbon value chain spanning E&P, LNG, pipelines, LPG, petrochemicals, city gas distribution, etc. In order to meet the growing appetite of Indian market, GAIL has been expanding its global presence to secure long term gas supplies. GAIL has signed a 20 year Sales and Purchase Agreement with Sabine Pass Liquefaction LLC, a unit of Cheniere Energy Partners USA, for supply of 3.5 million tons per year of LNG. GAIL also signed a Terminal Service agreement for 2.3 million tons per year of LNG liquefaction capacity with Dominion Cove Point LNG USA.

Antero Resources is an independent oil and natural gas company engaged in the acquisition, development and production of unconventional oil and liquids-rich natural gas properties located in the Appalachian Basin in West Virginia, Ohio and Pennsylvania.

Vega Energy Partners is a privately held company located in Houston, Texas. Through its predecessor companies, Vega and its principals have been engaged in the management, optimization, and development of natural gas assets for over 25 years.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.