Upon clarification by Calypso U.S. Pipeline LLC, FERC Friday reversed its position in a January order and said the company could proceed with the construction of 10 miles of its proposed offshore Florida pipeline when an affiliate's proposed deepwater liquefied natural gas (LNG) port, with which it would interconnect, gets the green light from the U.S. Maritimes Administration (MARAD).

In the January order, the Federal Energy Regulatory Commission essentially upheld its position in a March 2004 order approving the Calypso line, which expressly said Calypso U.S. Pipeline could not begin construction of its proposed offshore Florida line until Bahamian regulators had approved a Bahamian LNG terminal and associated pipeline that would connect with Calypso (see Daily GPI, Jan. 29).

The original project called for Calypso Pipeline, a subsidiary of SUEZ Energy North America Inc., to build a 42-mile pipeline to receive regasified LNG from a Bahamian pipeline at the exclusive economic zone (EEZ) international boundary (see Daily GPI, July 30, 2001). A SUEZ Energy affiliate was to construct a new LNG terminal in Freeport, Grand Bahama and a connecting Bahamian pipeline to the EEZ. The original project sponsor was Enron Global LNG. SUEZ Energy (then Tractebel) bought the project in 2002.

But the Bahamian regulatory officials have dragged their feet on their half of the project, frustrating the construction plans for the Calypso U.S. Pipeline. In the meantime, Houston-based SUEZ Energy 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 indicated it planned to 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 its 42-mile offshore pipeline upon the earlier of its affiliate receiving Bahamian regulatory approval or MARAD approval to build the deepwater port [CP01-409-007].

FERC in the Jan. 25 order denied Calypso's request, observing that "Calypso has not yet filed an application [at the agency] for authorization to construct pipeline facilities to interconnect with this deepwater LNG port." But Calypso, in seeking rehearing in February, clarified that it would not need to construct a lateral from its authorized pipeline in order to receive gas from SUEZ Calypso's proposed deepwater LNG port since SUEZ Calypso's application before MARAD includes pipeline facilities to extend from the deepwater LNG terminal to two receipt points on Calypso's Commission-approved pipeline.

In the Friday order, the Commission said Calypso Pipeline could build 10 miles of its proposed 42-mile offshore Florida line upon the deepwater port receiving MARAD approval. "Calypso will be authorized to commence construction only on that part of its pipeline extending from onshore Florida to the deepwater port's facilities. Calypso will not be authorized to construct pipeline facilities extending beyond the deepwater port interconnections to the EEZ unless the Bahamian LNG terminal and associated pipeline are approved" by Bahamian regulatory officials, the rehearing order said.

But before actual construction can begin, FERC said Calypso U.S. Pipeline must provide the agency with evidence that SUEZ Calypso has received MARAD authorization to build the proposed deepwater port. The pipeline must provide proof of Bahamian regulatory approval of its affiliate's LNG terminal and associated pipeline before Calypso can build the remainder of the proposed offshore Florida line, FERC noted.

If the Bahamian LNG project is ever approved and built, the Calypso pipeline would transport regasified LNG to a connection with Florida Gas Transmission (FGT) in central Broward County from the proposed 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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