Southern Solicits Interest in Further Expansion

With three expansions to its system in the works for 2002 and 2003, Southern Natural Gas is turning its attention to 2004, soliciting non-binding requests for long-term firm transportation on any part of its system.

In its open season notice the El Paso Energy subsidiary said that during the process of finalizing its South System II expansion, it discovered the market appears to have interest in new capacity that would become available in 2004. The open season will allow Southern to evaluate the interest, economics and design parameters for a potential project, "which could include any part of its system where sufficient interest is expressed, including the South Georgia lateral."

Southern notes that while the solicitation is non-binding on any party, only those who do formally express an interest will be guaranteed consideration in a project that goes forward. While it will be based on subscriptions for year-round capacity, shippers may specify their interest in sharing capacity on a seasonal basis with other shippers. If the firm contract quantities can be matched, shippers' requests may be combined to form a year-round subscription. During the open season Southern is also asking for any capacity turnbacks, which might be used to offset new requests and avoid construction of unnecessary expansion facilities.

If the results of the open season dictate an expansion, Southern says it will seek a minimum of 15-year binding service agreements to be signed no later than Dec. 15, 2001. Those then will be filed as part of its FERC application, which it expects to file in June 2002.

The open season started July 19 and will close Aug. 31, 2001 at 5:00 p.m.CST. Prospective shippers must submit a transportation service request form. Contact Leslie Hancock for forms (205) 325-3864, and Bruce Hughes (205) 325-7146 bruce.hughes@elpaso.com, Mark Limbaugh (205) 325-3878 mark.limbaugh@elpaso.com, or Paul Brown (205) 325-7316 paul.brown@elpaso.com, for project information.

Southern Natural has previously committed to three other mainline system expansions this year (see NGI, May 7) to increase gas supply to new generators in the Southeast. The projects so far add up to increased capacity of about 635 MMcf/d during 2002 and 2003 at an estimated capital cost of $350 million. Two of the projects have been filed at FERC and a third is expected to be filed this fall. The company also earlier this year reported its intent to construct and operate the $240 million Cypress Pipeline system, which will transport 310 MMcf/d of vaporized LNG to Jacksonville, FL, from a recommissioned import terminal at Elba Island, GA (see NGI April 30).

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