El Paso Corp. subsidiary Southern Natural Gas (SNG) reached an agreement with Southern Company Services, a Southern Company affiliate, to expand SNG's system capacity by up to 367 MMcf/d, approximately 10% of current capacity, to serve a new natural gas-fired generation facility of Southern Company utility Georgia Power Co.

Southern Company Services will enter into a 15-year firm transportation agreement with SNG to serve the plant from a new delivery point on SNG's pipeline to be determined by Southern Company Services no later than Dec. 1, 2007.

The capacity would serve a gas-fired generating station proposed for the site of Georgia Power's coal-fired Plant Jack McDonough in metro Atlanta. Jack McDonough is currently composed of two coal-fired units of about 540 MW total. Georgia Power is proposing the retirement of these and the construction of three gas-fired units of about 800 MW each. The utility included the plans in its 2007 Integrated Resource Plan, which was filed last week with the Georgia Public Service Commission. Georgia Power spokesman John Sell told NGI that the utility expects a decision from the PSC in about six months.

Previously, Georgia Power proposed adding two 800 MW gas-fired generators at the McDonough site. The addition of a third unit to replace McDonough's coal units would bring the capacity of the site to 2,400 MW. Plant Jack McDonough was built near Smyrna in the 1960s. The company also recently demolished a 1940s-era coal plant, Plant Atkinson, at the same site.

The pipeline expansion is scheduled to be constructed and placed in service in phases beginning in the fourth quarter of 2010. Capital for the project is expected to be as much as $360 million. A portion of the gas supply for the expansion will be sourced from North Louisiana and a portion will be provided from SNG's Elba Island LNG facility. SNG expects to file a certificate application with FERC in early 2008.

El Paso spokesman Bill Baerg told NGI the expansion would be accomplished through pipeline looping and additional compression along Southern Natural's existing right-of-way. An open season for capacity will be held later, he said.

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