NGI The Weekly Gas Market Report / NGI All News Access

Coastal, Williams Battle for Shot at Florida Panhandle

Coastal, Williams Battle for Shot at Florida Panhandle

A battle for a grip on the growing gas market in the Florida Panhandle has flared up, involving a trio of gas pipeline companies, two of which are planning new offshore routes to the state from producing platforms near Mobile Bay, AL.

The incumbent monopoly provider, Florida Gas Transmission, didn't give up any ground the last three times its old adversary Coastal Corp. entered the fray with proposed pipeline expansions to Florida and it isn't willing to start this time around. But it also will have to defend its ground against Williams-Transco, which launched an open season last week for its own offshore pipeline project, announced in December.

Transco officials said they were not surprised when Coastal announced a pipeline expansion that is nearly identical to their own. "It certainly is a good market," said Frank Ferazzi, vice president of customer service and rates for Transco. "And my other reaction is I'm not surprised they chose the route that they did. I presume they chose it for the same reason that we did. It made a lot of sense.

"First of all, the Mobile Bay area is the closest supply to Florida. Building an offshore route is both short in terms of distance, and you avoid a lot of the environmental issues that you would have to face with an all-land project," said Ferazzi. "The environmental rules in Florida are strict, but they are the same rules that anybody is going to have to follow to build new infrastructure; I'm talking about Coastal Corp., Williams or Florida Gas for that matter."

The Coastal and Williams Gulf-crossing projects are nearly identical. They both would start in Mobile Bay - though Transco argues Coastal has no infrastructure there - and extend in a southeasterly direction to make landfall near Tampa. They would traverse the center of the state, crossing Orlando and then would move toward West Palm Beach - although Transco said its line wouldn't extend that far south. Both are expected to carry between 700 MMcf/d and 1 Bcf/d of gas. And both projects also are expected to be filed with FERC later this year with in-service dates in June 2002.

Coastal said last week it has the early market lead with nine shippers to back its 700-mile pipeline project. "There is strong market support" for the Gulfstream Natural Gas System project, said Jeffrey A. Connelly, senior vice president of natural gas for Coastal. "Nine non-affiliated customers already have executed letters providing sufficient volume commitments to proceed with development of the project. However, Gulfstream will hold an open season from March 15 through March 29 for additional parties interested in contracting for firm transportation service."

"I'm not sure what they mean by letters," responded Ferazzi. "You know the FERC rules require an open season. They may have letters expressing interest in the project but in terms of actual binding commitments that's the purpose of the open season. Anything they get prior to the open season [means little or nothing]. The open season can change all that."

Last week, following Coastal's announcement Williams scheduled its own March open season for its proposed Buccaneer Pipeline project. Ferazzi said the upstream links are important assets for Buccaneer. "I think that gives us an advantage over Coastal because we own substantial infrastructure that is attached to reserves in the [Mobile Bay] area and they do not."

The big attraction is Florida's serious power generation growth. The state is expected to need more than 10,000 MW of additional power generation by 2007, according to the Florida Reliability Council. Coastal said pipeline laterals are planned to deliver gas to fuel new electric generation capacity at various locations along the Peninsula.

"We're talking to the same markets they're talking to. It's going to be almost exclusively to serve power generation, both independent power producers as well as electric distribution companies," said Ferazzi. He said Tampa and Orlando are two major cities that would be served.

Florida pipeline monopoly Florida Gas Transmission, a Citrus Corp. subsidiary, filed an application with FERC in December to expand its system by 225,000 Dth/d to serve multiple shippers but primarily Florida Power &Light. FP&L is experiencing sharp power demand growth, particularly in the Fort Myers area of Southwest Florida. The FGT expansion/extension would run from Tampa to Fort Myers, an area that's not being targeted by Buccaneer or Gulfstream. FGT officials have scoffed at the others' plans to build pipelines across the Gulf to the Florida coast, citing extremely tough environmental regulations in Florida, greater supply diversity through its own pipeline and its own more cost effective expansion plans.

But Coastal's Connelly said, "Gulfstream will be positioned to serve the state's growing needs with clean-burning natural gas in a manner that is most consistent with Florida's unique environmental sensitivities. Coastal has nearly 40 years of experience in offshore pipeline construction and operation that it will bring to bear to ensure that Gulfstream is managed on all fronts using state- of-the-art technologies."

In anticipation of a FERC filing during the third quarter of this year, Gulfstream representatives will be meeting with local and state officials, environmental groups, various state agencies, landowners, and other stakeholders to apprise them of the project and gain valuable input, Coastal said.

It's not the first time Coastal has planned a coastal invasion of Florida. In the late-1980s, the company launched the Sunshine Natural Gas System, which would have followed a similar route with most of the line in the offshore Gulf. Then in the early 1990s, Coastal twice attempted onshore routes to serve the Panhandle. In 1990, Coastal formed a partnership with United Gas Pipeline to build an intrastate line called Suncoast and connect it with United at the Florida-Alabama border. The project was shelved when Koch Industries bought United in 1993. Coastal later planned a variation of that project, renamed the SunShine Project, in 1993, which also was a combination of interstate and intrastate pipelines, but that also fell through.

"In a general sense, for probably all three, for what ever reason, the timing just wasn't right for those projects either for market reasons or other factors," said Coastal spokesman Joe Martucci. "This time I guess we feel we've got some strong market indications to go forward."

Rocco Canonica

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus