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Washington Gas Says Customers Need Natural Gas Storage Facility in Key Portion of Its Service Region; Cost When Built Estimated at $110 Million over 20 Years; $540 Million if Plant Not Built


Wednesday, February 1, 2006 9:00 am EST



Public Company Information:

"We have estimated that the liquefied natural gas storage facility will cost $110 million in construction and operating costs over 20 years"

WASHINGTON--(BUSINESS WIRE)--Washington Gas has proposed building a liquefied natural gas (LNG) storage facility on company property in Chillum, Md. The company-owned site has been in operation since the 1940s and previously served as a natural gas storage facility. The site continues to house natural gas pipelines that currently distribute natural gas safely to customers in Maryland and throughout the region.

The planned site will be Washington Gas's third gas storage facility in the Washington, D.C., metropolitan area. The company currently maintains storage facilities in Rockville, Md., and in Springfield, Va. An affiliated subsidiary operates a storage facility in West Virginia on behalf of Washington Gas customers.

According to James H. DeGraffenreidt, Jr., chairman and chief executive officer of Washington Gas, the new storage facility is part of the company's strategic plan for meeting the region's future energy needs at reasonable prices. "Our objective in building a third storage facility -- in Chillum, Md. -- is to sustain Washington Gas's ability to fulfill its obligation to provide safe, reliable supply at a reasonable cost to customers throughout this region, even during periods of the highest demand for natural gas."

The facility is a vital element in Washington Gas's continued ability to meet the growing demands of a thriving community, company officials said today. This strategically important initiative will add the infrastructure that will be needed within the next few years to keep pace with natural gas demand even on the coldest winter days. Constructing the facility also will provide Washington Gas with a strategic advantage for managing the costs that its customers pay for natural gas service by allowing the utility to leverage its favorable geographic location.

"We are unique in the Northeast because of our access to multiple interstate pipelines," said DeGraffenreidt. "This position affords us supply diversity which, in turn, helps to sustain supply reliability through access to a number of different natural gas production areas at a reasonable cost."

According to Washington Gas, the Chillum location was selected because it represents the best, most cost-efficient option for new supply for customers. "We have estimated that the liquefied natural gas storage facility will cost $110 million in construction and operating costs over 20 years," said Adrian P. Chapman, vice president of operations, regulatory affairs and energy acquisition. "Possible alternatives could cost approximately $540 million over the same time period. That cost differential would be included in rates paid directly by Washington Gas customers, and we would rather pursue the less costly alternative."

The country continues to experience an extremely tight balance between natural gas supply and demand, resulting from limitations on the accessibility of new sources of supply and increasing customer requirements for clean natural gas, according to Chapman.

As demand continues to escalate, whether due to individual customer needs or as a result of natural gas being used for electric generation, it will be increasingly important to identify new sources of supply. Liquefied natural gas will be an important, future increment of that new supply, according to Washington Gas officials.

The proposed storage tank at the Chillum, Md., site will reflect Washington Gas's unyielding commitment to safety and feature the highest integrity design currently in use. The proposed facility will benefit from decades of advances in technology that make new LNG plants highly reliable.

Headquartered in Washington, D.C., Washington Gas delivers natural gas to more than one million residential, commercial and industrial customers throughout metropolitan Washington, D.C., and the surrounding region. Washington Gas is a subsidiary of WGL Holdings, Inc. (NYSE:WGL). For more information about Washington Gas, please access

For more information about WGL Holdings and its subsidiaries, you may access

Note: This news release and other statements by the Company include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the outlook for earnings, revenues and other future financial business performance or strategies and expectations. Forward-looking statements are typically identified by words such as, but not limited to, "estimates," "expects," "anticipates," "intends," "believes," "plans," and similar expressions, or future or conditional verbs such as "will," "should," "may," "would" and "could." Although the Company believes such forward-looking statements are based on reasonable assumptions, it cannot give assurance that every objective will be achieved. Forward- looking statements speak only as of today, and the Company assumes no duty to update them.

As previously disclosed in the Company's filings with the Securities and Exchange Commission, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the level and rate at which costs and expenses are incurred in connection with constructing, operating and maintaining the Company's natural gas distribution system; the ability to implement successful approaches to modify the current or future composition of the gas used to supply customers as a result of the introduction of Cove Point gas into the Company's natural gas distribution system; variations in weather conditions from normal levels; the ability of natural gas producers, pipeline gatherers and natural gas processors to deliver natural gas into interstate pipelines for delivery by those interstate pipelines to the entrance points of the regulated utility's natural gas distribution system as a result of factors beyond the control of the Company or its subsidiaries; changes in economic, competitive, political and regulatory conditions and developments; changes in capital and energy commodity market conditions; changes in credit ratings of debt securities of WGL Holdings, Inc. or Washington Gas Light Company that may affect access to capital or the cost of debt; changes in credit market conditions and creditworthiness of customers and suppliers; changes in laws and regulations, including tax, environmental and employment laws and regulations; legislative, regulatory and judicial mandates or decisions affecting business operations or the timing of recovery of costs and expenses; the timing and success of business and product development efforts and technological improvements; the pace of deregulation efforts and the availability of other competitive alternatives; terrorist activities; and other uncertainties. The outcome of negotiations and discussions the Company may hold with other parties from time to time regarding utility and energy-related investments and strategic transactions that are both recurring and non-recurring may also affect future performance. For a further discussion of the risks and uncertainties, see the Company's most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and other reports filed with the Securities and Exchange Commission.


Washington Gas
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Tim Sargeant, +1-202-624-6043
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Financial Community:
Melissa Adams, +1-202-624-6410