Duke's Sawgrass Pipeline to Invade Florida
Two would go by sea, and now one would travel on land, making for three
brand new pipeline projects targeting the Florida peninsula and the state's
substantial growth in power generation gas demand.
Last week Duke Energy unveiled plans for its Sawgrass Energy Transmission
System - a major interstate that would supply Southeast markets. Duke's
Sawgrass joins Williams-Transco's Buccaneer Pipeline and Coastal's Gulfstream
projects, as well as expansion of Florida Gas Transmission (FGT), in targeting
a potential 1.5 Bcf/d growth in demand for Florida power generation.
The Sawgrass system would have capacity of about 1 Bcf/d and begin near
Coden, AL, cross southern Mobile Bay and continue into the Florida Panhandle
and down the peninsula. It would cost about $1.3 billion and is planned
to be in service by 2003. Besides power generation, the project also targets
large industrials and gas distribution systems.
Buccaneer and Gulfstream propose essentially identical routes: from
Mobile, AL, across the Gulf of Mexico to Tampa, FL, and across Florida
to cities along the Atlantic Coast. Because it would take a land route,
Sawgrass proposes to serve gas demand in Alabama and the Florida Panhandle.
"Certainly some of the larger benefits [of Sawgrass] to both states
are the security and competition that result from the addition of a new
transportation system and the environmental advantages natural gas brings
to the area," said Robert Evans, president of Duke Energy Southeast
Pipeline Corp. "The Mobile Bay region and communities throughout Florida
can be assured that Duke Energy is committed to thoroughly reviewing all
aspects of the project for environmental compatibility."
It remains to be seen whether a route by land or one by sea is more
attractive to regulators and landowners. Evans said Duke will work with
the states and federal government to allay any environmental concerns.
Because it's taking a land route, Sawgrass will have to deal with more
landowners than Buccaneer or Gulfstream. But some of those landowners or
their neighbors could also be customers, adding to the pipe's revenue.
Also, Sawgrass wouldn't be wading into Florida's traditionally jealously
guarded coastal waters. Over the next several months, Duke will begin detailed
"Florida faces a constantly growing need for more electric power,"
Evans said. "Natural gas represents the cleanest, most cost-efficient
fuel source for Florida generating plants to meet this rapidly growing
need." Based on the most recent estimates released by the state Public
Service Commission, Florida's projected need for new generating capacity
over the next decade has risen another 20% above estimates made in late
1997, making it the fastest growing market in the nation.
In July 1998, the Florida Reliability Coordinating Council submitted
a plan to the Florida Public Service Commission outlining the need for
more than 10,000 MW of additional power generation capacity within the
state by 2007. If fueled entirely by gas, this would require an additional
1.5 Bcf/d of capacity (see NGI Oct. 19, 1998).
Power demand is soaring particularly in southwestern Florida where currently
there are no gas pipelines.
Sawgrass would create some synergies among Duke Energy business units,
Evans said. On the market end Duke would be developing power generation.
Upstream, the Dauphin Island Gathering Partnership - of which Duke owns
37% - is a partner in a gas processing plant at Coden.
Duke has had discussions with several potential customers, and the Sawgrass
project has a committed load of about 250 MMcf/d from Duke Energy North
America, Duke Energy's wholesale power generation development business
The Phase IV expansion of FGT - Florida's only interstate - has eight
shippers and is to be in service by May 2001. Phase V is expected to be
anchored by power generation load. FGT spokeswoman Gina Taylor told NGI
the pipeline has firm commitments from Florida Power & Light (FPL)
and Southern Co. subsidiary Gulf Power Co. Volumes were not available as
contracts need to be finalized. FGT is seeking additional customers and
expects word of more business within 30 days.
Williams spokesman Chris Stockton said the company hopes to make a filing
at the Federal Energy Regulatory Commission for Buccaneer by the end of
the summer. Meetings have been held with environmental groups and public
officials to discuss routing issues. A number of open houses have been
held and more are planned. Buccaneer has 1.3 Bcf/d in nominations. "We're
currently in the process of trying to finalize some of those contracts,"
Stockton said. Buccaneer is projected to cost about $1.5 billion.
Coastal spokesman Joe Martucci said Gulfstream does have some firm commitments.
"I can't really be specific in terms of who the customers are or the
commitments." He said negotiations are continuing with other prospective
customers. "The response we've received, I would say, has been overwhelmingly
positive, especially the environmental community in Florida." Gulfstream
is expected to cost about $1.2 billion.
Joe Fisher, Houston