Bacon's Rebellion

Democracy Thrives in Sunlight

New Gas-Fired Power Station Brings Hope to Brunswick County

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by

James A. Bacon
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Brunswick County Power Station in final stages of construction. Photo credit; Dominion Virginia Power
Brunswick County Power Station in final stages of construction. Photo credit; Dominion Virginia Power

by James A. Bacon

To Joan Moore, executive director of the Brunswick County Industrial Development Authority (IDA), the opening of the $1.2 billion Brunswick County Power Station means more than the thousand construction jobs that pumped money into the local economy for a year, more than the 40 permanent operating jobs, and even more than the $5 million in annual tax revenue, a sum roughly equal to what the county collects from real estate property taxes.

What really gets her excited is the $300 million natural gas pipeline, made possible by Dominion Virginia Power, that will provide industrial volumes of natural gas to Brunswick County and four other Southside jurisdictions.

Local jurisdictions could not afford to finance construction of a pipeline solely for the purpose of recruiting industry. But now, says Moore, Brunswick County and neighboring jurisdictions can compete for a large category of business that it could not before. Brunswick, which is 57% African-American, has suffered economically in recent years from a shrinking population, the decline of U.S. manufacturing and the shutdown of the St. Paul’s College, a historically black university.

Construction of the natural gas-fired power plant required Dominion to cut a deal with the giant Transco pipeline to build a high-capacity extension to Brunswick County. With help from a $30 million grant from the Tobacco Region Revitalization Commission, the Brunswick IDA is piggybacking on the Transco line to add additional capacity at incremental cost to serve local industry.

Brunswick County has access to natural gas but not in large enough volumes to attract industrial customers that use gas as an energy source or feedstock. Thanks to the grant, the new pipeline will provide roughly 100,000 decatherms (100 million cubic feet) per day over and above the supply that Dominion has contracted for, said Jim Eck, Dominion vice president for business development. As a rule of thumb, a big industrial user will consume 5,000 decatherms per day.

Among the facilities expected to benefit from the new supply of natural gas is the Mid-Atlantic Advanced Manufacturing Center (MAMaC), in neighboring Greensville County, which has 1,600 acres, abuts Interstate 95 and enjoys CSX Corp. rail access. Industrial volumes of natural gas will make MAMaC far more competitive, said Sen. Frank Ruff, R-Clarksville, who attended the ribbon-cutting ceremony.

Dominion’s search for a location to build a new gas-fired plant was the catalyst. When deciding  2011 and 2012 where to locate the plant, the electric utility narrowed the choice to between Brunswick and Chesterfield County. To serve the Brunswick power station as well as an anticipated gas-fired station next door in Greensville County (still in the regulatory approval process), Dominion would have to cover the cost of building a 100-mile pipeline from Transco’s trunk line in Pittsylvania County by reserving capacity of 250,000 decatherms a day for Brunswick and 250,000 decatherms to the Greensville plant.

Brunswick County applied for the $30 million grant from the tobacco commission. “The idea was to build a larger pipe than Dominion needed,” said Dan J. Poteet, senior manager-generation business development.

The Tobacco Commission’s grant caused a brief flap in 2014 when the Associated Press ran an article suggesting that the commission awarded the grant to induce Dominion to locate in Brunswick County. Dominion was listed as a beneficiary of the grant application, although the money was paid to Transco “to lower the construction cost” of the pipeline. The AP article noted that “Dominion is without peer in terms of political sway in Virginia and routinely gets friendly legislation passed with broad bipartisan support.” The article was picked up by a Washington Post columnist who cited the incident as evidence that the tobacco commission “serves at times as a kind of slush fund to help the politically connected.”

At the time, Dominion officials insisted that the company never lobbied for the grant, and that the grant was only one of several factors the company considered when deciding to locate in Brunswick County. In any case, the $30 million will not benefit Dominion shareholders. The company would have built a power plant, upon which it would be allowed to generate a return on investment, one way or the other. By contrast, the cost of purchasing and transporting natural gas is passed on to ratepayers in a fuel adjustment clause. Dominion officials have projected that the Brunswick plant will result in $1 billion in fuel savings over the life of the plant, which could generate power over the next 40 to 50 years.

Meanwhile, Brunswick County officials are delighted with their new corporate citizen. Said Joan Moore: “Dominion has been one of the greatest business partners ever to work with the county.”

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20 responses to “New Gas-Fired Power Station Brings Hope to Brunswick County”

  1. James A. Bacon Avatar
    James A. Bacon

    Note: There are other angles to the Brunswick power plant story. I couldn’t get to all of them today. So, please be patient before jumping over me for failing to mention X, Y, and Z in the article. — JAB

  2. LarrytheG Avatar
    LarrytheG

    I’m just confused as to why you’d locate two new natural gas plants 100 miles away from an existing pipeline to provide 3000 mwatts of power in an area with 30,000 people and a high unemployment rate – and away from where projected demand is expected.

    what is it about this location that makes it worth spending 300 million on a pipeline – rather than put the plant where the existing pipeline is?

    and why, after all of this – build another pipeline to replace the 300 million extension?

    it’s a puzzle why you’d locate new power plants away from existing pipelines and away from where increased demand is projected.

    1. Acbar Avatar
      Acbar

      Excellent questions! What I understand is along these lines:
      1. You have to have a good site, reasonably priced, and it helps to have local political support. This has both.
      2. You need a labor force to run the plant. Apparently labor is available locally or can be brought in.
      2. You have to get construction materials and your labor force in. This location has a major 4-lane highway and rail.
      3. You have to get fuel in. This location has a proposed extension of the Transco pipeline, and the potential for another (competing) gas supply, and also a rail supply if conversion to another fuel is ever required. More about the pipeline below.
      4. You have to get the electricity you generate out. This location is reasonably close to 500 kV (big!) transmission lines which will be tapped.
      5. You have to get the power to a broad market. The big transmission lines take care of this.
      6. You should not have to operate the plant uneconomically (when the market doesn’t need it) because of local transmission constraints. Again, the big transmission lines take care of this.

      In particular, LarryG, you ask about why Dominion would locate this plant “away from where increased demand is projected.” Brunswick is NOT near a significant concentration of load, but it IS near the southern ‘backbone’ of DVP’s portion of the grid, which effectively puts the power plant “electrically next to” every customer on DVP’s entire system, indeed the entire PJM market.

      But then there’s that gas pipeline — both the initial Transco spur and the long-term supply proposal. That’s where it gets interesting. Why would Dominion want to create additional gas consumption in the Brunswick vicinity? How much pipeline capacity is for the local industrial park and how much is for Dominion? Who pays for what? What else might Dominion build there? What’s wrong with helping the community?

      I look forward to more from JB on this.

      1. James A. Bacon Avatar
        James A. Bacon

        My understanding is that Dominion is reserving 250 decatherms per day for Brunswick, 250,000 decatherms per day for Greensville, and that 100,000 decatherms per day will be available for industrial customers thanks to the Brunswick IDA.

        The story gets more complicated when we consider that Dominion has contracted capacity from the Atlantic Coast Pipeline to serve Brunswick and Greensville. The idea is to provide access to Gulf Coast gas via Transco and Marcellus gas via the ACP, allowing Dominion to take advantage of price differentials between the two sources of supply.

        I’ll have more on this tomorrow.

        1. TomH Avatar
          TomH

          Transco Southside Expansion Project I includes 91 miles of 24″ pipeline on an existing right-of-way and 7 miles on new right-of-way to serve the Brunswick plant that will begin operation later this summer. This project has a capacity of 270,000 decatherms per day, 250,000 is reserved for the power plant and 20,000 is for Piedmont Natural Gas to serve the local area. This project was completed in September 2015 at a cost of $299 million.

          Transco Southside Expansion Project II, scheduled for late 2018, includes 4 miles of 24″ pipeline from the Brunswick plant to the Greensville plant that is under development. A new compressor station at the existing Pittsylvania compressor station is also included to provide an additional 250,000 decatherms per day of natural gas along this new spur. These additions will cost about $120 million.

          Dominion signed a 20 year Long-Term Supply Contract with Transco for each of these projects. A portion of the cost of these projects was for piping and compressor station modifications in New Jersey that allowed the Transco system to reverse the normal direction of flow and allow gas from the Marcellus production zone to flow from north to south to serve markets in the southeast. Dominion was one of the early adopters in utilizing this strategic shift in gas flows to allow gas from the Marcellus to reach Virginia and North Carolina.

          By using the Transco pipeline rather than the ACP, local industries are able to gain access to this source of natural gas. Developers of the ACP have publicly stated that the ACP is a wholesale pipeline only; citing a $500,000 minimum tap-in fee that would rule out use by most local industries. In addition, Virginia Power Services has reserved just 300,000 decatherms of natural gas supply from the ACP which is insufficient to fully power both of these plants (ignoring their 20 year commitment to Transco).

  3. LarrytheG Avatar
    LarrytheG

    IF – a gas plant can be located away from the existing and projected demand areas as long as it is near a 500K or equivalent line – WHY would you locate it away from an existing pipeline that already has capacity?

    https://www.energy.vt.edu/vept/electric/in-state_trans.jpg

    http://www.censhen.org/wp-content/uploads/2015/08/Alternatives.jpg

    you’d think the sweet spot for new gas plants would be where the lines on the two maps intersect – as opposed to paying 300 million to extend AND then ANOTHER even more expensive pipeline.

    I don’t think there is anything wrong at all with “helping” a locality -but those decisions are ancillary to the primary decisions and happen when it is “possible”.

    re: ” but it IS near the southern ‘backbone’ of DVP’s portion of the grid”

    where on the powerline map above is DVP’s “backbone”?

    bonus question – are these two new plants needed for North Carolina – Cary, Triangle, etc?

    1. Rowinguy Avatar
      Rowinguy

      Larry, regarding your bonus question–the Brunswick and Greensville plants will provide power throughout the DVP and DNC systems, but Cary, Raleigh and other research triangle locales are not served by DNC. All the power that is generated by these plants will be sold through the PJM markets and that area is not within PJM.

  4. LarrytheG Avatar
    LarrytheG

    so here is another question – 1350 megawatts will power more than half a million homes so there are two new plants that will produce enough power for a million new homes.

    If not mistaken – there are about 3 million households in Va.

    so where are these new homes going to be built that these two new plants will produce power for?

    1. TomH Avatar
      TomH

      Part is to replace coal-fired capacity that is retiring. Part is to reduce the amount of capacity that has been imported from outside of Virginia (much of this has been coal-fired). And part is to supply Dominion’s imagined load growth of 1.5% that is 200-300% higher than other utilities in PJM are projecting.

      As you mention, Virginia’s economic and population growth (and resulting new housing) does not support this aggressive forecast. I think Dominion Resources is on a huge campaign to put as much new infrastructure in as they possibly can to assure a long-term stream of revenues. Currently, investors are rewarding them for those plans. Revenue growth has been a challenge for Dominion in the past. In the old utility model, this appears to be a good strategy for shareholders. In the transition to a modern utility model, either the ratepayers, the shareholders, or both, could end up paying extra for long-term assets that are not used to their expected capacity.

    2. Rowinguy Avatar
      Rowinguy

      In addition to what Tom says, there are thousands of MW of non-residential load being added to the Dom Transmission Zone, in the form of data centers proliferating in the Northern Virginia service areas of DVP and NOVEC.

      1. TomH Avatar
        TomH

        Thousands of megawatts seems very high for data centers. Do you have a source that identifies the amount of this load and the projected increase in load from this type of use? I would appreciate finding an accurate estimate for this, it could be much more than I thought.

        1. Rowinguy Avatar
          Rowinguy

          “Thousands” (plural) may be overstating it; “upwards” of a thousand is what I should have said. Look at current DVP transmission filings for new lines to serve these facilities before the SCC. Every county north of the Rappahannock is actively recruiting these facilities.

          The internet does not seem to be a shrinking load and much of its infrastructure is in NoVa.

  5. TomH Avatar
    TomH

    These plants are basically on the intersection of the pipeline corridor and the 500 kV transmission lines. The purple line going from NOVA through Remington, North Anna and going into Dominion’s territory in North Carolina is a 500 kV line. This is the largest that Dominion has, I believe. The 765 kV line looks like it belongs to AEP (APCo). Would someone please correct me if this is wrong.

    The magenta line on the pipeline map is the Transco corridor. The main right-of-way going from southwest to northeast contains four to six pipelines depending on where you are in the corridor. The spur going eastward contains a 20″ pipeline. This is the right-of-way upon which the Southside Expansion 24″ pipeline has been built to serve the Brunswick and Greensville plants. There was not enough capacity in the 20″ line to serve the two power plants, so they had to build a 100-mile pipeline back to the main corridor and will expand the compressor capacity to provide adequate gas supplies.

    Believe it or not, utilities often try to site major projects where it is easiest to access existing infrastructure with the least disruption. In this case, they limited the need for new transmission and gained access to a gas supply over existing right-of-way. Seems to be a responsible way to do things, assuming that you need to build the plants in the first place.

    The ACP is a different animal. Dominion is building 300 miles of 42″ pipeline over new right-of-way on very sensitive terrain to serve these same two plants that are already properly supplied. Since the amount of gas that Virginia Power Services (VPS) has reserved is not sufficient to supply these plants, it seems a very high price to ask the ratepayers to bear for a backup source of supply. The Transco pipeline can already access supplies from two sources: the Marcellus and the Gulf Coast production area.

    If the VPS gas is intended for the plant proposed in 2022, obtaining gas from the Transco and Columbia Gas pipelines that currently traverse Virginia would provide much greater flexibility in siting a future power plant than constraining it to be close to the ACP (without building a lengthy new spur).

    The Transco corridor continues through North Carolina. It has sufficient available capacity to serve all of the Duke power plants and other ACP customers with a much shorter connection than would be required with the ACP. It might be possible to connect to the proposed Duke plants using the existing Cardinal pipeline corridor, further reducing the disruption caused by developing new right-of-way.

    The best news for ratepayers is that it is far cheaper to transport the gas over existing pipelines than it costs to use new pipelines. The bad news is that the pipeline developers cannot use the ratepayers to subsidize a $6 billion investment that will yield them a 14-15% rate of return.

    Larry, I would love to know how to add images to these posts. If you are willing to share your secret, please let me know.

    1. Rowinguy Avatar
      Rowinguy

      Tom you are correct that 500 kV is the largest line DVP uses in its transmission system and that the 765 kV lines shown on Larry’s map are Apco lines. AEP has the largest system of 765 kV lines in the world, I believe.

      I would add that not only utilities, but private developers as well look at pipeline and transmission line maps to find the best spots for power plant development, i.e., where those facilities intersect.

  6. LarrytheG Avatar
    LarrytheG

    It super easy TomH – you just need to find an image with the stuff you want to show then put the URL in your comment.

    I use GOOGLE Images to find “stuff”… then grab the URL and insert.

    but if you have your own image – put it in Google Drive or similar then make it public on the share and then grab the URL and insert.

    1. TomH Avatar
      TomH

      Thank you. I’ll try sometime and see what happens.

      1. Acbar Avatar
        Acbar

        TomH, to post a graphic, just insert a link to a .jpg that’s on the web; it can’t be a.png file, or a .jpg saved on your own computer (at least I haven’t found a way yet).

  7. LarrytheG Avatar
    LarrytheG

    re: ” Believe it or not, utilities often try to site major projects where it is easiest to access existing infrastructure with the least disruption. In this case, they limited the need for new transmission and gained access to a gas supply over existing right-of-way. ”

    why not build where the gas line already exists and is crossed by a 500Kv line?

    re: replace retiring coal plants… one plant would replace Yorktown.

    so that leaves the other plant which would (I think) supply 500,000 homes or commercial/industrial.. Plausible perhaps… maybe Jim has more to post.

    building the ACP seems excessive … although I though I had heard earlier that the ACP would provide only enough for the two plants and little else so is the current 100 mile extension an expendable pipeline that can be re-purposed for other uses that Transco would essentially replace the power plants with?

    Utilities don’t plop down new infrastructure willy-nilly whereever it seems “right”. I would expect that a long and fairly detailed planning process with specific requirements drove the locations. The rest of us schmucks just don’t know all the details that drove the process – not the least of which – is Dominions mission as an investor-owned company to generate ROI.

    These two plants are also – a ways away from PJM territory… much closer to Duke and southern locales.

    1. TomH Avatar
      TomH

      The ACP has a capacity of 1.3 billion cubic feet of natural gas per day (Bcf/d), which would supply about 5 plants the size of Brunswick. The ACP is expected to provide for 1+ gas-fired power plants in Virginia, 3 new Duke plants in North Carolina with the remaining gas going to Piedmont Natural Gas, AGL and other natural gas distribution companies. Much of that assigned to Piedmont (now a Duke subsidiary) might also end up being used by power plants. About 7-8% of the maximum capacity is unassigned.

      It is not clear what the .155 Bcf/d ( 60% of a power plant) going to AGL in the Chesapeake area will be used for. The GA representatives in the Hampton area made an appeal to our U.S. Senators to speed up the approval of the ACP to meet the needs of their area. They referenced the supply shortage in that area during the Polar Vortex as something the ACP would overcome. More supply would have avoided that (whether from the ACP or existing pipelines); but analysis has shown that the supply constraints experienced in the Hampton area during the Polar Vortex were a result of the poor way in which the gas was dispatched rather than insufficient capacity in the pipelines. Some have suggested it is designed to provide for LNG export from the port, but no announcements about such a facility have yet been made.

      The developers also have mentioned that the capacity of the ACP could be expanded to 2.0 Bcf/d at some future date by the addition of more compressor stations along the route. Compressor stations do not make good neighbors and create extra opposition. Many pipeline developers now propose a pipeline with the minimum number of compressors, then add more compressor stations later, once the pipeline is built, which reduces opposition to the original proposal. Sort of a sneaky way of doing things since the approval does not assess the actual impact of the pipeline, but it seems an effective strategy and avoids having to create more customers for the initial proposal.

      Selecting a site for a major utility project is a very difficult process. A multitude of factors must be considered. You also have to make choices that will withstand scrutiny 10-15 years in the future. When I was doing this, we pioneered applying new decision-making techniques that were being developed by the Defense Department to make better decisions under conditions of substantial uncertainty. I can’t say how they are doing it now, but it is never easy. You can please some of the people some of the time, but never please all of the people all of the time.

  8. LarrytheG Avatar
    LarrytheG

    well the dumb guy approach would be to say -put the plants where the existing 500kv lines intersect the existing pipelines since the electricity can be moved all over creation including throughout the PJM region.

    beyond that – one has to ask why these gas plants are baseload plants instead of peakers that could mesh with co-located solar whereas the combined cycle plants cannot.

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