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FPL, Tractebel, El Paso to Combine Bahamas LNG/Pipeline Projects

December 20, 2004
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FPL, Tractebel, El Paso to Combine Bahamas LNG/Pipeline Projects

FPL Group Resources, Tractebel North America and El Paso Corp. said last week they plan to combine their competing Bahamas pipeline and liquefied natural gas (LNG) projects, which would provide substantial imported natural gas to the South Florida market later this decade.

"By combining the talents and resources of our three companies, we will be able to deliver a more efficient project to bring a new supply of natural gas to South Florida," said Brad Williams, vice president of gas projects for FPL Group Resources.

Although the companies announced plans to combine the two projects to better compete with their lone rival, AES Ocean Express, which also is building a pipeline to Florida from a proposed LNG terminal in the Bahamas, they said they still intend to pursue all the regulatory approvals necessary for both Tractebel's Calypso pipeline and related LNG terminal, and El Paso's Seafarer pipeline and High Rock LNG terminal in the Bahamas. Calypso already has a FERC certificate and state authorizations in Florida, but Seafarer was only recently filed at FERC (see NGI, Nov. 22). The competing AES project also has received a FERC certificate and state approval (see NGI, March 29).

FPL has an option to purchase 100% of El Paso's High Rock LNG terminal at South Riding Point on Grand Bahama Island and 50% of Seafarer, which would deliver 1 Bcf/d to South Florida. The Calypso pipeline project would deliver about 830,000 Dth/d of regasified LNG to South Florida as early as 2007.

Both projects and the competing AES project have been in a race to meet Florida's soaring gas needs for power generation. The Seafarer project has trailed in the regulatory process but gained a market leg up earlier this year by bringing in FPL Group Resources, which subsequently signed an 800,000 Dth/d LNG supply agreement with ExxonMobil's RasGas partnership with Qatar. FPL also has the advantage of being affiliated with Florida's largest electric utility, Florida Power & Light, which is currently holding a requests for proposals (RFP) process for LNG supply starting in 2007. The results of the RFP are expected in March and could determine which LNG terminal/pipeline breaks ground.

None of the LNG projects, including AES Ocean Express, have received final authorizations from the Bahamian government.

Under terms of the new agreements announced Tuesday, all three companies (Tractebel, FPL and El Paso) will be equity owners of both the Seafarer and Calypso pipeline projects, and ultimately will construct only one of them from the Bahamas to Florida. FPL Group Resources and affiliates of Tractebel North America Inc. will be the equal owners of the LNG receiving terminal in the Bahamas and a marketing company based in Florida called Sailfish Natural Gas Company Ltd.

The companies said Sailfish will be submitting a joint proposal to Florida Power & Light for LNG supplies. In fact, the Qatar supply agreement with RasGas is subject to Sailfish successfully competing to provide regasified LNG to Florida Power & Light and other Florida customers and obtaining certain regulatory approvals.

William P. Utt, CEO of Suez subsidiary Tractebel North America, also said Tuesday the Belgian utility conglomerate is "excited" to be "expanding Suez's trans-Atlantic LNG position through these agreements. Our enormous experience in the LNG, natural gas and electricity generation value chains will contribute to ensuring that the most efficient project is built to serve the Florida market..."

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ISSN © 2577-9877 | ISSN © 1532-1266
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