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Virginia Gas Company and Roanoke Gas Company Announce Modified Pipeline Service Agreement
ROANOKE, Va., May 30 /PRNewswire/ -- RGC Resources, Inc. (Nasdaq: RGCO - news), parent company of Roanoke Gas Company, and NUI Corporation (NYSE: NUI - news), parent company of Virginia Gas Company, today announced the modification of their agreement whereby NUI would not construct a planned natural gas pipeline from Saltville, Va. to Roanoke, Va. due to higher than projected construction costs. NUI, which acquired Virginia Gas Company in March 2001, will complete construction of the pipeline only to Radford, Va., approximately 45 miles south of Roanoke.
Instead, Roanoke Gas Company and NUI Corporation have worked together to increase capacity to meet the short-term needs of Roanoke Gas customers through an alternative option. Virginia Gas will connect into a pipeline owned and operated by East Tennessee Natural Gas Company, a subsidiary of Duke Energy, which travels from Radford to Salem, providing Roanoke Gas an incremental capacity of 4,000 decatherms per day. The planned Virginia Gas pipeline was to provide an additional 17,500 decatherms per day to Roanoke Gas Company, including a planned extension to Franklin County and Rocky Mount.
``Continued project assessment has shown us that due to economic and construction cost reasons, it is no longer viable to complete the project as planned,'' said Mark Abramovic, NUI Senior Vice President and Chief Operating Officer. ``We are pleased that we were able to jointly develop an alternative solution to meet the immediate natural gas needs of Roanoke Gas.''
Actual construction costs of the pipeline from Saltville to Pulaski were much higher than anticipated and construction bids for the remaining length of the pipeline were nearly double the estimated projections made by Virginia Gas in 1998, stated Abramovic.
Roanoke Gas CEO John Williamson estimates the increased capacity will enable the company to meet the growth needs of the Roanoke Valley for three to four years. The company will be evaluating alternatives to provide additional capacity and supply for the Roanoke Valley, including additional NUI proposals.
``We appreciate the work NUI has done to help ensure that our immediate needs are met,'' said Williamson. ``However, this situation is disappointing to us and to the residents of Franklin County, who remain without access to natural gas.''
NUI Corporation, based in Bedminster, NJ operates natural gas utilities serving approximately 380,000 customers in seven states along the eastern seaboard. NUI also operates businesses involved in natural gas storage, pipeline and exploration; wholesale energy trading and portfolio management; retail energy sales; energy and environmental project development; energy consulting; sales outsourcing; telecommunications' and geospatial and customer information systems and services.
RGC Resources, Inc. provides energy and diversified products and services to customers in Virginia and West Virginia through its operating subsidiaries including Roanoke Gas Company, Bluefield Gas Company, Diversified Energy (dba as Highland Propane Company and Highland Energy) and RGC Ventures, Inc. (dba Highland Heating and Cooling, GIS Resources, and Applications Resources). The company is listed on the NASDAQ stock market, trading symbol RGCO.