Virginia Natural Gas Works to Provide Savings Through Projects and Gas Procurement Strategies

United States natural gas consumption has two seasonal peaks, largely reflecting hot and cold weather-related fluctuations in energy demand. This summer, Virginia Natural Gas has been working to meet the energy needs of customers ahead of the peak for the upcoming heating season.  

Completing key infrastructure projects that ensure reliable gas supply to the entire service territory and taking advantage of low commodity prices driven by the pandemic are two ways Virginia Natural Gas (VNG) is preparing for increased energy demand during colder weather.  VNG has been building stockpiles by purchasing and storing natural gas, locking in lower commodity costs ahead of the heating season to help keep customers' costs low.  

"We're always exploring ways to reduce costs and drive efficiencies to save money for our customers," said Ken Yagelski, director, Gas Supply. "When demand increases in the winter, every customer deserves peace of mind that we will be there to keep their homes warm and their businesses running at an affordable cost. 

"VNG continues to make meaningful investments in critical infrastructure upgrades essential to providing reliable service when demand increases as the temperatures go down, such as the Southside Connector, which became operational in late 2019. Since the Southside Connector was placed into service, the project has saved VNG customers an estimated $2.5 million in natural gas costs by providing the company the ability to shift its gas purchases to lower-priced sources. 

The Southside Connector, a nearly eight-mile pipeline, connected Hampton Roads' two existing main sources of natural gas supply. It now provides the entire service territory with improved access to natural gas through an additional feed and helps ensure a more reliable gas supply for the region throughout the year and the cold months ahead. While the project was designed to improve the reliability of natural gas service to Hampton Roads, it also provides the benefit of enhanced optionality for gas supply purchases to help make certain customers receive the lowest priced natural gas available. 

"We're making investments in modernizing and improving our gas infrastructure, so customers' energy needs are met safely and reliably now and well into the future," added Robert Duvall, president of Virginia Natural Gas. "This particular investment in the Southside Connector, and other reliability and resiliency projects, will help us to continue to deliver safe, affordable, and clean natural gas to our customers." 

Along with infrastructure upgrades, VNG continues to purchase and store natural gas while the prices remain low. 

The spring of this year marked one of the roughest patches for the oil and natural gas industry due to the coronavirus (COVID-19).  Stay-at-home orders due to the pandemic slashed crude oil consumption to decade lows, resulting in lower production of associated natural gas, which is natural gas produced by oil wells. 

However, even with oil production slightly declining the first half of the year, VNG was still able to purchase lower-priced natural gas. The natural gas has been stored during the warm summer months and will be withdrawn to meet the higher customer demand experienced in the colder winter months.  

"The purchase and storage of natural gas means VNG customers can depend on a reliable source of energy at a cost they can afford," said Yagelski. "The abundance of natural gas supply has kept prices low, which is important for families to save on energy costs, and business owners to make greater investments due to reduced operating costs. We've been able to buy gas for customers when prices have been at their lowest, store it for later use and pass on those savings directly to our customers." 

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