RICHMOND, Va.— Dominion, one of the nation’s largest energy companies, has contracted to deliver 500,000 dekatherms per day of natural gas produced in West Virginia to various interconnections with pipelines in Ohio, as producers look westward to seek new markets for Marcellus production.
The company also has closed on agreements with two natural gas producers to lease approximately 100,000 acres of Marcellus shale rights underneath several of its natural gas storage fields in West Virginia.
Leasing acreage
Dominion has farmed out nearly 80,000 acres to CONSOL Energy in Lewis and Harrison counties in its Fink-Kennedy and Lost Creek storage areas. It has also subleased nearly 9,000 acres to CONSOL Energy mainly in Gilmer and Ritchie Counties in its Racket-
Newberne storage area
Dominion has also farmed out approximately 13,000 acres to Triana Energy LLC in Harrison and Taylor Counties in its Bridgeport Storage area.
In conjunction with the farmout with CONSOL, Dominion Transmission and CONSOL have executed a binding precedent agreement to transport 250,000 dekatherms per day from the Fink-Kennedy area to two different points in eastern Ohio.
Pipeline interconnection
One is an interconnection with the Texas Eastern pipeline at Mullet, Ohio, and the other an interconnection with the Rockies Express Pipeline in Clarington, Ohio. The contract term is 15 years beginning in November 2016.
Dominion has also received commitments from various producers to transport 250,000 DT/day to interconnections in Lebanon, Ohio. These long term contracts begin in June 2014 and continue with various terms up to 21 years.
Dominion will retain the storage fields, but permit directional drilling into the much deeper Marcellus shale formation. The farmout agreements will result in payments to Dominion of approximately $200 million over a period of nine years, and an overriding royalty interest in the natural gas produced.
