A £10m gas contract could create up to 150 jobs in the north-east of England.
The extra gas supply will be used in North East homes
A 19-mile-long pipeline (31 kilometres) is being built from Sunderland, to Billingham in Teesside.
Pipeline company Transco says the development is needed to meet a growing demand for gas in East Durham.
There will be a major environmental regeneration programme when construction work ends in October 2003.
The route crosses three major roads, the A19, A689 and A1185, as well as many waterways.
Transco has been in consultation with a range of organisations, including English Nature and Durham Wildlife Trust.
The pipeline will be built by contractors Entrepose Industrial Services, and will run from Cowpen Bewley, north-east of Billingham, to Wearside.
Along the way it will skirt around Newton Bewley, High Stotfold, the Hurworth Burn Reservoir, Castle Eden Walkway, Trimdon Colliery, Haswell, and Hetton-le-Hole.
Construction work will take place between April and October 2003.
Transco Project Manager Alan Liddle said: "The new pipeline will increase the capacity of the network to meet the growing demand for gas in the area.
"Whilst there will be some disruption for people living along the route of the pipeline, we will do everything within our power to keep it to a minimum."