Elba Island LNG is Getting a New Route to Florida

Liquefied natural gas from Trinidad could be bound for Florida soon. El Paso Corp. is in the process of recommissioning its Elba Island LNG import terminal near Savannah, GA, and subsidiary Southern Natural Gas Co. filed an application with FERC last week to build a pipeline from the import terminal to Jacksonville, FL.

The $240 million Cypress Natural Gas Co. pipeline was first announced about a year ago (see NGI, May 1, 2000). The proposed 166-mile line would carry 310 MMcf/d of gas to interconnections with Southern Natural's South Georgia Lateral, Florida Gas Transmission Co., Atlanta Gas Light near Brunswick,GA, and Jacksonville Electric Authority's new Brandy Beach power plant near Jacksonville, FL. El Paso subsidiary and Cypress affiliate El Paso Merchant Energy has signed up for the bulk of the capacity, 200,000 MMBtu/d. Although Enron had the option to partner with El Paso in building the pipeline, it has not acted on it.

"We did have a development agreement where they [Enron] had an opportunity to participate in the project," said Bruce Hughes, vice president, business development for Cypress Natural Gas Co. "They had an opportunity to evaluate it and participate, and they just at this point have elected not to participate." Hughes added that future discussions were still possible.

Hughes expects a 12- to 14-month review period prior to a final certificate. Construction is still expected to commence during the third quarter 2002, with a projected in-service date of June 1, 2003. A specific route has been identified, but a few route options exist on the northern part of the system near Savannah, according to Hughes.

"Cypress provides needed infrastructure for continued economic development and growth in southern Georgia and northern Florida," said Jim Yardley, president of Southern Natural. "Demand is increasing for natural gas-fired power generation in this region, and the proximity of the Elba Island LNG facility enables us to serve this demand cost effectively."

The announcement came one day after El Paso released its record first quarter earnings and updated the progress of its aggressive LNG program. During its conference call last Wednesday, El Paso's John W. Somerhalder, president of the company's pipeline group, said that the Elba Island LNG facility, which is being reactivated, is ahead of schedule and is targeted to begin accepting shipments on Oct. 1. Currently, the company has agreements to import LNG from Trinidad.

There are several other pipeline projects destined for the state because of burgeoning energy demand, which is expected to increase 25% by 2007. Florida Gas Transmission, a jointly owned El Paso and Enron subsidiary, is marketing a Phase VI expansion. The route, size and capacity have not been determined. Meanwhile, the massive Gulf-crossing Gulfstream Natural Gas System received its final FERC certificate to proceed in late February. The $1.7 billion, 1.13 Bcf/d gas pipeline is targeted to begin service in June 2002. The proposed 744-mile pipe, which is sponsored by Duke Energy and Williams, will extend from Mississippi and Alabama across the Gulf of Mexico to serve Florida.

"The Cypress project's current focus is on the Cypress corridor and Northeastern Florida," said Hughes. "I would think all three projects [Cypress, Gulfstream, and FGT Phase VI expansion] and all three participants in the Florida market will compete to serve the growing market there, and from a supply standpoint, what we think we bring to the Florida market is an additional incremental source of gas supply."

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