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FGT Has Tight Grip On Florida Panhandle

December 7, 1998
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FGT Has Tight Grip On Florida Panhandle

Diversity of supply sources, a transportation network that blankets nearly the entire state of Florida and strong customer ties will give Florida Gas Transmission (FGT) the edge over new projects - such as Williams-Transco's proposed Buccaneer Pipeline - that plan to enter its territory to cash in on the growing generation market, says FGT President Rockford G. Meyer.

Buccaneer sponsors are preparing for an open season starting shortly after Jan. 1 for their line, which would travel under the Gulf of Mexico to invade FGT's monopoly turf along Florida's west coast. But Meyer isn't concerned about the competition. "I think our pipeline system offers a lot of advantages over a line which is just coming over the Gulf [and would access] only Gulf supplies," he said, when asked if he viewed the planned Buccaneer line as a competitive threat. "Our pipeline accesses not only the offshore Gulf of Mexico supplies, but also supplies from South Texas, Louisiana, Mississippi and Alabama. We access interstate pipelines, intrastate pipelines, plant gas and wellhead gas. That's a very valuable asset to our customers, we think, to have that kind of diversity of gas supply, and not just be tied to supplies out in the Gulf, which can be subject to fairly significant weather."

Also "because we have the existing pipeline infrastructure, we're able to expand our system in a very cost competitive manner" and more quickly by looping or adding compression, Meyer said. "We don't need to build a 500-600 MMcf/d line to serve new load. We can size our expansion to meet the precise needs the market has. So I think from a gas supply, from a flexibility and from a cost perspective, it would be very difficult for another pipeline to compete" against FGT in the Florida market. Since 1990, the pipeline - which extends from the southern tip of Texas to southern tip of Florida - has doubled in size to 5,000 miles as a result of several expansion projects.

Meyer further thinks the planned Buccaneer line, which would run 400 miles under the Gulf of Mexico and come ashore somewhere near Tampa Bay, could face stiff opposition from state regulators and environmentalists. "Obviously, there has not been one [pipeline] built across the Gulf to the state of Florida. The state...historically has been very protective of its beaches and waterways, and I think rightfully so. I think this would be a real concern if I were looking at building across the Gulf," he told NGI.

One potential problem for Williams could be obtaining a Submerged Land Environmental Resource Permit (SLERP) from Florida's Environmental Regulation Committee (ERC). "Anybody talking about touching Florida's coast would have to get one," said ERC spokeswoman Jacki McGority, "We issue them and I can tell you that Florida is very protective."

Williams, however, is not intimidated by the environmental issue. "We will soon begin surveying the landfall area to determine a path that will minimize the impact of our construction on the environment," spokesman Paul Gredell said, "Moreover, we believe that the overall environmental impact of our project will be positive as we bring an incremental source of natural gas into Florida."

"It's fair to say we have our eye on those electric generation plants springing up all over Florida, as does FGT." Gredell said. The Florida Reliability Coordinating Council predicts the need for 10,000 MW of additional power generation in the state by 2007. If fueled entirely by gas, that amount of power could require an additional 1.5 Bcf/d of capacity.

Meyer said he wouldn't be at all surprised to see other pipeline competitors try to enter the Florida market in the future to cash in on the expected growth in the generation market, but he's not worried about that now. "...[O]ur focus is on our customers in trying to work very, very closely with them and what they want to do...and really not focus on the competition. I think if I focus on another pipeline I'm going to be a day late and a dollar short."

FGT Files for Expansion

FGT is staying on top of the situation, filing its fourth expansion/extension project at FERC last week. If approved by the Commission, the project would make gas available to customers in the southwestern part of the state for the first time.

The "anchor" tenant on the proposed 205-mile project will be Florida Power &amp Light's (FP&ampL) Fort Meyers generation facility in southwest Florida, which is expected to be repowered and brought into commercial operation by May 2001. FP&ampL plans to spend about $500 million to turn the existing oil-fired facility into a combined-cycle power plant with a capacity of 1,500 MWs.

Plans specifically call for FGT to extend its 30-inch West Leg by about 114 miles from Hillsborough County, FL, to the Fort Meyers' generating station, enabling it to receive around 180,000 MMBtu/d of capacity by April 2000. This is more than half of the 272,000 MMBtu/d of capacity that would be added by the project.

As another major aspect of the $350 million expansion, FGT proposes to build a new 46-mile Smyrna Beach lateral in the eastern part of the state to serve a proposed Duke Energy generation station, according to the pipeline's application. The new line would traverse Lake, Seminole and Volusia counties in Florida.

The pipeline further seeks to build and add mainline looping, compression totaling 48,570 horsepower, four new delivery points including three measurement stations, and other associated facilities in Mississippi, Alabama and Florida. The proposed expansion/extension, according to FGT, would provide customers with access to new deep-water gas supplies via interconnects with Destin Pipeline and Transcontinental Gas Pipeline's Mobile Bay line.

Eight shippers already have signed 20-year agreements for the entire firm capacity of the proposed project, FGT said. They include FP&ampL; Florida Power Corp., Kissimmee Utility Authority; Florida Municipal Power Agency; Peoples Gas System, a division of Tampa Electric Co.; Georgia-Pacific Corp.; National Gypsum Co.; and Enron Capital &amp Trade Resources. These customers are expected to invest about $1 billion over the next few years in new power plants, plant repowering/modifications and other facilities, the pipeline noted.

FGT, a subsidiary of Citrus Corp., which is owned by Sonat and Enron, has asked the Commission to roll in the project costs with its Phase III expansion that was placed into service in March 1995. In addition, it requested that FERC issue a certificate by Jan. 1, 2000 in time for it to begin service in May 2001.

John Norris, Susan Parker

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ISSN © 2577-9877 | ISSN © 1532-1266
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