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El Paso Pipes Launch Companion Projects in Southeast; Progress Energy Signs $3.3B Service Deal

El Paso Pipes Launch Companion Projects in Southeast; Progress Energy Signs $3.3B Service Deal

El Paso Corp. pipeline affiliates, Southern Natural Gas Co. and Florida Gas Transmission (FGT), said Friday they have begun open seasons for transportation capacity on planned and related expansions that are designed to meet the growing demand in southeastern gas markets by 2007.

Southern Natural reported it already has received firm commitments from Progress Energy Florida Inc. and BG LNG Services LLC for capacity on a proposed 175-mile pipe expansion from Savannah, GA, to Jacksonville, FL. FGT, which is half owned by El Paso, said it also has signed a precedent agreement with Progress Energy Florida to provide transportation service as part of a Phase VII expansion of its system.

The Southern Natural open season got underway Dec. 3 and will end Jan. 17, while FGT's open season started Dec. 1 and will go through Dec. 31, according to El Paso.

Progress Energy has entered into a 20-year, $3.3 billion agreement with Southern Natural and FGT, as transportation providers, and with BG LNG Services to supply LNG-source natural gas to the company's 461 MW Hines 4 combined-cycle generation facility in Bartow, FL, as well as to satisfy its existing gas requirements, said Garrick Francis, a spokesman for the Raleigh, NC-based energy company. FGT's precedent agreement with Progress Energy also is to supply transportation to the company's Hines generating facilities.

Francis declined to disclose the volumes that Progress Energy has purchased. But he estimated the agreements, which become effective May 1, 2007, will take care of about 20-25% of the company's natural gas requirements in 2007.

Southern Natural's so-called Cypress Project, which will include 165 miles of 24-inch diameter pipeline and 10 miles of 30-inch diameter pipe in Georgia and northern Florida, would transport natural gas from Elba Island, the company's liquefied natural gas (LNG) import facility near Savannah, providing additional pipeline infrastructure and supply diversity for these markets, El Paso said.

BG Group, parent of BG LNG Services, holds the rights through December 2023 to market 446 MMcf/d of Elba Island's sendout capacity, including 159 MMcf/d from LNG delivered by Marathon and LNG delivered by BG from Atlantic LNG trains 2 and 3 in Trinidad.

Information on the Southern Natural project's capacity and cost estimate will be deferred until an application is filed at the Federal Energy Regulatory Commission, which the pipeline plans to do in the second quarter of 2005, said El Paso spokesman Aaron Woods. The project is targeted for in-service by the middle of 2007, he noted.

FGT gave scant details about its proposed Phase VII project, with pipeline spokesman Gina Davis noting that information about the amount of capacity to be added and the project cost won't be known until the open season is concluded later this month. Like Southern Natural's Cypress project, FGT's Phase VII expansion is scheduled for in-service in mid-2007, she said.

"This open season will assist FGT and its customers in finalizing the timing and size of a Phase VII expansion," said Bob Hayes, senior vice president and chief commercial officer for the pipeline. FGT also will consider offers from existing shippers to permanently release firm capacity, reducing the need for construction of incremental facilities.

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