Duke moves further into natural gas with stake in $3B pipeline

Dive Brief:

Duke Energy has bought a 7.5% stake in a proposed $3 billion natural gas pipeline set to run through Alabama, Georgia, and Florida, the Charlotte Observer reports. The 500-mile Sabal Trail pipeline, if built, would help fill demand for gas in Southern as they transition away from coal.
Duke announced Tuesday that it would invest $225 million over the next seven years in the pipeline, but the total amount is less significant than the investment itself. As Utility Dive has reported, electric utilities are increasingly investing in gas reserves, production, and delivery as low gas prices and emissions regulations push them to utilize more of the resource.
Last September, for instance, Duke bought a 40% stake in the proposed $5 billion, 550-mile Atlantic Coast Pipeline, planned to run through West Virginia, Virginia and North Carolina. The goal, Duke told the Observer, is to smooth out natural gas price spikes.

Dive Insight:

Duke's interest in gas investments extends beyond pipelines: Late last year the company announced it was considering asking state regulators to allow it to rate-base investments in natural gas production — necessary, it says, to hedge against volatile gas prices that can end up hiking rates for consumers.

Duke is far from alone in its actions. Florida Power & Light early this year asked state regulators to approve direct investments in gas exploration and drilling, something regulators had not done before. Entergy is also eyeing a $300 million investment in gas reserves, and has asked the Louisiana Public Service Commission to alter regulations to allow them to do so. In March, Mississippi Governor Phil Bryant (R) signed a bill authorizing utilities to make such investments.

And it's not just American electric utilities. Japan's Sumitomo and India's Gail both have stakes in U.S. shale gas, and AGL Resources has hinted it may invest as well.

Pending approval from federal and state regulators, construction on the pipeline is expected to start in 2016, with an in-service date of 2017.

“Duke Energy’s investment in the pipeline further expands the company’s commitment to build critical natural gas pipeline infrastructure in the Southeast U.S., where natural gas has become an important fuel that provides significant environmental benefits,” said Phil Grigsby, Duke's vice president of commercial transmission, in a statement.