UGI Corporation (NYSE: UGI) announced yesterday that a subsidiary of UGI Energy Services, LLC, plans to construct an approximately 35-mile pipeline to bring low-cost natural gas produced in the Marcellus Shale region to a planned 1,000-megawatt natural gas-fuelled power generation facility near Shamokin Dam in Snyder County, Pennsylvania.
Panda Power Funds and Sunbury Generation LP plan to construct the new “Hummel Station” power plant on the site of Sunbury Generation LP’s existing coal-fired plant that has been retired from operation.
The new Hummel plant is expected to be operational in the second half of 2017. In addition to serving the generation plant, the new pipeline will supply natural gas and system reinforcement to distribution systems operated by UGI Penn Natural Gas, Inc. and UGI Central Penn Gas, Inc.
Later this year, UGI Sunbury, LLC, a wholly-owned subsidiary of UGI Energy Services, LLC, will file for approval to construct and operate the pipeline from the Federal Energy Regulatory Commission (FERC), the agency that regulates transportation of natural gas through interstate markets. The 20-inch diameter, steel pipeline will be designed to transport 200,000 Dth per day of natural gas. It is expected to cost approximately $160 million and to be in service in early 2017.
“Power generators in the Northeast and Mid-Atlantic are moving to local natural gas as the fuel of choice because it is a clean, abundant and affordable resource that reduces carbon emissions and complies with stringent air-quality rules,” said UGI President and CEO John Walsh. “This project serves to meet the growing demand for natural gas from power generators, while providing greater system reliability and enhancing natural gas availability for our expanding customer base in communities across central and northeast Pennsylvania served by UGI Penn Natural Gas and UGI Central Penn Gas.”
“We look forward to working alongside UGI Energy Services and Sunbury Generation as the lead developer for Hummel Station,” said Todd Carter, president and senior partner of Panda Power Funds. “These projects are good for the community, good for the Commonwealth and great for Pennsylvania Marcellus shale gas producers and royalty owners.”
Additionally, the pipeline and power plant projects are expected to benefit the region’s economy and create jobs. During the construction phase, the two projects combined will create over 800 new jobs.
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