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Virginia gas-fired plant boosts spot prices

15 Jun 2017 21:02 (+01:00 GMT)
Virginia gas-fired plant boosts spot prices

Houston, 15 June (Argus) — Demand from Panda Power Funds' new 778MW Stonewall natural gas-fired power plant in Loudoun County, Virginia, is supporting spot prices on its supplying gas pipelines.

Spot natural gas prices at Dominion Transmission South have averaged $2.27/mmBtu in the 19 days since Panda Power announced the plant was operating, up by 50pc from a year earlier. Prices at the Columbia Gas Transmission Appalachia pool have averaged $2.87/mmBtu, up by nearly 40pc from the corresponding year-earlier period. Dominion South trades at a steep discount to the Appalachia pool, averaging 60¢/mmBtu below the pool over the past 19 days. Both have averaged at a discount to Henry Hub during that period.

The $571mn Stonewall plant began operations last month, the private equity firm said on 18 May. The plant supplies power to up to 778,000 homes in the northern Virginia and Washington, D.C., area.

Dominion Transmission is expanding its system to better serve the plant. The pipeline's $210mn Leidy South project was approved by the US Federal Energy Regulatory Commission (Ferc) in August and will provide about 150mn cf/d (4mn m³/d) of firm transportation service to the new and existing power plants, including Stonewall.

Panda Power began site work at the Stonewall facility in mid-July 2014 and began construction later that year. The plant connects to the PJM Interconnection's electric grid through an existing Dominion Virginia Power 230 kV line that traverses the site.

Panda Power brought two gas-fired plants on line in Pennsylvania about a year ago, adding 1,658MW of output to the PJM grid. Those plants were the first projects designed specifically to capitalize on inexpensive gas produced in the Marcellus shale, and have supported prices on the Leidy Line and Tennessee Gas pipeline zone 4 Marcellus.

Panda Power is constructing another natural gas-fired plant in central Pennsylvania's Snyder County. That plant is expected to begin commercial operation in the first quarter of 2018, and could support spot prices at Dominion Transmission North. The private equity fund is also planning to bring a gas-fired plant in Brandywine, Maryland, on line in 2019.