FGT Has Tight Grip On Florida Panhandle
Diversity of supply sources, a transportation network that
blankets nearly the entire state of Florida and strong customer
ties will give Florida Gas Transmission (FGT) the edge over new
projects - such as Williams-Transco's proposed Buccaneer Pipeline
- that plan to enter its territory to cash in on the growing
generation market, says FGT President Rockford G. Meyer.
Buccaneer sponsors are preparing for an open season starting
shortly after Jan. 1 for their line, which would travel under the
Gulf of Mexico to invade FGT's monopoly turf along Florida's west
coast. But Meyer isn't concerned about the competition. "I think
our pipeline system offers a lot of advantages over a line which is
just coming over the Gulf [and would access] only Gulf supplies,"
he said, when asked if he viewed the planned Buccaneer line as a
competitive threat. "Our pipeline accesses not only the offshore
Gulf of Mexico supplies, but also supplies from South Texas,
Louisiana, Mississippi and Alabama. We access interstate pipelines,
intrastate pipelines, plant gas and wellhead gas. That's a very
valuable asset to our customers, we think, to have that kind of
diversity of gas supply, and not just be tied to supplies out in
the Gulf, which can be subject to fairly significant weather."
Also "because we have the existing pipeline infrastructure,
we're able to expand our system in a very cost competitive manner"
and more quickly by looping or adding compression, Meyer said. "We
don't need to build a 500-600 MMcf/d line to serve new load. We can
size our expansion to meet the precise needs the market has. So I
think from a gas supply, from a flexibility and from a cost
perspective, it would be very difficult for another pipeline to
compete" against FGT in the Florida market. Since 1990, the
pipeline - which extends from the southern tip of Texas to southern
tip of Florida - has doubled in size to 5,000 miles as a result of
several expansion projects.
Meyer further thinks the planned Buccaneer line, which would run
400 miles under the Gulf of Mexico and come ashore somewhere near
Tampa Bay, could face stiff opposition from state regulators and
environmentalists. "Obviously, there has not been one [pipeline]
built across the Gulf to the state of Florida. The
state...historically has been very protective of its beaches and
waterways, and I think rightfully so. I think this would be a real
concern if I were looking at building across the Gulf," he told
One potential problem for Williams could be obtaining a
Submerged Land Environmental Resource Permit (SLERP) from Florida's
Environmental Regulation Committee (ERC). "Anybody talking about
touching Florida's coast would have to get one," said ERC
spokeswoman Jacki McGority, "We issue them and I can tell you that
Florida is very protective."
Williams, however, is not intimidated by the environmental
issue. "We will soon begin surveying the landfall area to determine
a path that will minimize the impact of our construction on the
environment," spokesman Paul Gredell said, "Moreover, we believe
that the overall environmental impact of our project will be
positive as we bring an incremental source of natural gas into
"It's fair to say we have our eye on those electric generation
plants springing up all over Florida, as does FGT." Gredell said.
The Florida Reliability Coordinating Council predicts the need for
10,000 MW of additional power generation in the state by 2007. If
fueled entirely by gas, that amount of power could require an
additional 1.5 Bcf/d of capacity.
Meyer said he wouldn't be at all surprised to see other pipeline
competitors try to enter the Florida market in the future to cash
in on the expected growth in the generation market, but he's not
worried about that now. "...[O]ur focus is on our customers in
trying to work very, very closely with them and what they want to
do...and really not focus on the competition. I think if I focus on
another pipeline I'm going to be a day late and a dollar short."
FGT Files for Expansion
FGT is staying on top of the situation, filing its fourth
expansion/extension project at FERC last week. If approved by the
Commission, the project would make gas available to customers in
the southwestern part of the state for the first time.
The "anchor" tenant on the proposed 205-mile project will be
Florida Power & Light's (FP&L) Fort Meyers generation
facility in southwest Florida, which is expected to be repowered
and brought into commercial operation by May 2001. FP&L plans to
spend about $500 million to turn the existing oil-fired facility
into a combined-cycle power plant with a capacity of 1,500 MWs.
Plans specifically call for FGT to extend its 30-inch West Leg
by about 114 miles from Hillsborough County, FL, to the Fort
Meyers' generating station, enabling it to receive around 180,000
MMBtu/d of capacity by April 2000. This is more than half of the
272,000 MMBtu/d of capacity that would be added by the project.
As another major aspect of the $350 million expansion, FGT
proposes to build a new 46-mile Smyrna Beach lateral in the eastern
part of the state to serve a proposed Duke Energy generation
station, according to the pipeline's application. The new line
would traverse Lake, Seminole and Volusia counties in Florida.
The pipeline further seeks to build and add mainline looping,
compression totaling 48,570 horsepower, four new delivery points
including three measurement stations, and other associated
facilities in Mississippi, Alabama and Florida. The proposed
expansion/extension, according to FGT, would provide customers
with access to new deep-water gas supplies via interconnects with
Destin Pipeline and Transcontinental Gas Pipeline's Mobile Bay
Eight shippers already have signed 20-year agreements for the
entire firm capacity of the proposed project, FGT said. They
include FP&L; Florida Power Corp., Kissimmee Utility Authority;
Florida Municipal Power Agency; Peoples Gas System, a division of
Tampa Electric Co.; Georgia-Pacific Corp.; National Gypsum Co.; and
Enron Capital & Trade Resources. These customers are expected to
invest about $1 billion over the next few years in new power
plants, plant repowering/modifications and other facilities, the
FGT, a subsidiary of Citrus Corp., which is owned by Sonat and
Enron, has asked the Commission to roll in the project costs with
its Phase III expansion that was placed into service in March 1995.
In addition, it requested that FERC issue a certificate by Jan. 1,
2000 in time for it to begin service in May 2001.
John Norris, Susan Parker