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FERC Rejects Calypso's Plea to Build Before Bahama Project OK'd

FERC Thursday denied a request of Calypso U.S. Pipeline LLC, a subsidiary of SUEZ Energy North America Inc., to begin construction of an offshore Florida pipeline before an affiliate has received regulatory approval to build a liquefied natural gas (LNG) terminal in the Bahamas and a connecting Bahamian pipeline. Calypso sought the authorization so that it could interconnect with an affiliate's proposed deepwater LNG port.

The original plans called for a SUEZ Energy affiliate to construct a new LNG terminal in Freeport, Grand Bahama and a connecting Bahamian pipeline, which would tie in with the Calypso line at the exclusive economic zone (EEZ) international boundary (see Daily GPI, July 30, 2001). The sponsor at that time was Enron Global LNG. SUEZ Energy (then Tractabel) bought the project in 2002. The Bahamian regulatory officials have dragged their feet on their part of the project. Frustrated, Houston-based SUEZ Energy has moved ahead with the development of a deepwater port 10 miles off the southeastern coast of Florida, which would serve as an offshore delivery point for LNG transported by tankers.

Last May, Calypso said it might add a new receipt point to its proposed connecting line about 10 miles off the coast of Florida to accept deliveries from the proposed deepwater port. It asked for FERC authorization to begin construction of the 42-mile offshore pipeline upon the earlier of its affiliate receiving Bahamian approval or the authority to build the deepwater port. FERC, in a March 2004 order approving the Calypso line, expressly said Calypso could not begin construction until Bahamian regulators had approved the LNG terminal and connecting pipeline.

"The Commission is unable to grant this request," the order said [CP01-409]. The Federal Energy Regulatory Commission pointed out that while Calypso's affiliate, SUEZ Calypso, has filed an application with the U.S. Maritime Administration seeking approval to build the deepwater port (see Daily GPI, Nov. 2, 2006), Calypso has not yet filed an application with the Commission seeking the go-ahead to build pipeline facilities to interconnect with the LNG port.

"Further, while Calypso states that it contemplates the deepwater port interconnection as a second interconnection, it also states that it may seek authorization to construct pipeline facilities to access a deepwater port interconnection in lieu of an interconnection at the EEZ, if its affiliates are unsuccessful in obtaining the necessary authorizations for the Bahamian LNG terminal and pipeline," the order noted.

"If it turns out that Calypso needs both interconnections or just a deepwater port interconnection, Calypso will have to file an application seeking approval of additional pipeline routes and facilities and further rate review," FERC said. SUEZ just recently received an environmental stamp of approval for modifications to the pipeline project to allow it to interconnect to the deepwater port (see Daily GPI, Dec. 14, 2006).

To accommodate the deepwater LNG port, FERC gave Calypso permission to modify near-shore horizontal directional drilling construction so that it can build a tunnel of approximately 10-feet diameter from Port Everglades, FL, to a point about 3.2 miles seaward on the subsea floor where the depth is about 126 feet.

The Commission also granted Calypso's request to defer the in-service date of the pipeline to June 30, 2010, as well as to increase the diameter of the 42-mile pipeline located in U.S. waters to 30 inches from 24 inches. The change would not affect the certificate capacity of the proposed pipeline (832,000 MMBtu/d), Calypso said.

If the Bahamian LNG project is ever approved and built, the Calypso pipeline would transport gas to a connection with Florida Gas Transmission (FGT) in central Broward County from a connecting Bahamian pipeline at the EEZ international boundary. The line would make landfall at Port Everglades, then travel onshore to a proposed interconnection with FGT adjacent to Florida Power & Light's Fort Lauderdale power plant.

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