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Dominion announces deal to deliver W.Va. natgas
December 10, 2013 - Ben Klein
RICHMOND, Va. (AP) — Dominion announced agreements Tuesday to deliver 500 million cubic feet of West Virginia-produced natural gas daily to Ohio and to lease more than 100,000 acres of Marcellus shale rights.
Dominion will receive payments over nine years of approximately $200 million under the leasing agreements and royalties for the natural gas produced.
The delivery of West Virginia natural gas to Ohio reflects a move by energy companies to seek new markets westward for natural gas drilled from the vast Marcellus shale formation, which extends from upstate New York to the Virginias.
The natural gas destined for Ohio will be drilled on 80,000 acres Dominion has farmed out in Lewis and Harrison counties to CONSOL Energy, a Pittsburgh-area energy company. It also has subleased nearly 9,000 acres to CONSOL in Gilmer and Ritchie counties.
CONSOL said the deal reinforces its "commitment to being a leading natural gas producer in the Appalachian Basin."
"These parcels represent what could be the largest untapped contiguous acreage in the southern core of the Marcellus Shale," J. Brett Harvey, chairman and CEO of CONSOL, said in a statement. "They complement our already significant acreage position in northern West Virginia."
Dominion has also farmed out 13,000 acres to Triana Energy LLC of Charleston, W.Va., in Harrison and Taylor counties.
The drilling will occur under natural gas storage fields in those leased areas. Dominion will retain the storage fields and permit drilling into much deeper Marcellus shale formation.
Under an agreement with CONSOL, Dominion Transmission will transport 250 million cubic feet per day to Mullet and Clarington, Ohio. Dominion has also received commitments from various producers to transport 250 million cubic feet daily to Lebanon, Ohio.
Dominion is one of the nation's largest producers and transporters of energy.
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