Washington Gas Announces Cause of Unusual Leak Patterns in Prince George's County, Maryland and Identifies Approaches to Prevent Similar Issues

WASHINGTON, July 6 /PRNewswire-FirstCall/ -- Following several months of consultation with independent laboratories, Washington Gas Light Co., a wholly-owned subsidiary of WGL Holdings, Inc., today released a report identifying the cause of recent natural gas leaks in a portion of Prince George's County, Md.

Earlier this year, Washington Gas identified approximately 1,400 leaks in a 100-square-mile area in the county. In April, the company announced plans to repair all leaks in this area within six months of identification. To date, Washington Gas has completed approximately two-thirds of these repairs.

The unusual leak patterns resulted from the deterioration of rubber seals contained in mechanical couplings, which join sections of distribution mains and service lines. Washington Gas engaged ENVIRON International Corp., Polymer Solutions, Inc., and Akron Rubber Development Laboratory in February to investigate and identify the root cause and possible solutions.

ENVIRON, the lead consultant, investigated a number of plausible factors that could have precipitated the premature deterioration of seals in the affected area. It also isolates three leading contributors: winter ground temperatures, aging seals, and gas composition.

Based on the findings, the chemical composition of the gas that supplies the affected areas of Prince George's County is the key contributing factor that precipitated the deterioration of rubber seals. The age of the seals and winter ground temperatures also affect other areas of the Washington Gas service territory that employ mechanical couplings. These areas have not experienced increased leak patterns.

"ENVIRON's comprehensive investigation provides clear data that will help us to continue to achieve our primary goal -- to deliver natural gas safely and reliably in all of the communities that we serve," said James H. DeGraffenreidt, Jr., Chairman and CEO of WGL Holdings. "We are assessing several manageable approaches to supplement our existing rehabilitation program and prevent similar conditions from emerging elsewhere."

The affected area of Prince George's County is supplied with natural gas from the Cove Point liquefied natural gas (LNG) terminal in southern Maryland. The terminal is owned and operated by Dominion Resources and has supplied the affected area in Prince George's County for the past two years. The gate station that delivers gas supply to the affected area serves as the primary transfer point for Cove Point gas in that region.

The Cove Point gas adversely impacted rubber seals in the affected area because of its chemical composition. The findings conclude that the resulting drying effects of this gas can be reversed.

"We believe that we can reverse seal deterioration by conditioning the Cove Point gas entering the system to prevent future drying of rubber seals," said Adrian Chapman, Washington Gas's Vice President of Energy Acquisition and Regulatory Affairs.

Washington Gas will monitor closely the quality of the gas entering the system to optimize gas composition. Until the company can track consistent, positive results from the proposed approaches to reverse seal deterioration, it will continue its rehabilitation project -- including special leak surveys -- in Prince George's County. The project calls for the rehabilitation of service lines and distribution mains in the affected area -- even if no leaks have been detected -- by December 2007.

Washington Gas estimates the costs of this rehabilitation work at $144 million. This figure includes potential paving costs. All costs described in this release represent estimates that could differ materially from the final amount of costs that are actually incurred.

Washington Gas will provide detailed information about the study's findings and outline proposed approaches to stem seal deterioration at a media briefing on Thursday, July 7, at 10:30 a.m. Eastern Time. The company will conduct the briefing at its Forestville, Md., offices, located at 4000 Forestville Rd.

To view a copy of the report, visit the Washington Gas Web site at http://www.washingtongas.com/ on Thursday, July 7.

Headquartered in Washington, D.C., WGL Holdings is the parent company of Washington Gas Light Company, a natural gas utility that serves approximately one million customers throughout metropolitan Washington, D.C., and the surrounding region. In addition, it holds a group of energy-related retail businesses that focus primarily on retail energy-marketing and commercial heating, ventilating and air conditioning services. Additional information about WGL Holdings is available on its Web site, http://www.wglholdings.com/.

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," "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 successfully implement approaches to modify the current or future composition of the gas being used to supply customers as a result of the introduction of Cove Point gas into the distribution system of Washington Gas Light Company; variations in weather conditions from normal levels; 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 relevant 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.