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Gulfstream Files While Buccaneer Stalls

October 18, 1999
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Gulfstream Files While Buccaneer Stalls

Williams' Buccaneer Gas Pipeline was the first to file an underwater Florida-bound project with FERC on Sept. 30 (see NGI Oct. 4), but Coastal Corp.'s competing Gulfstream Natural Gas System moved to the lead last week, filing its project three days after Buccaneer's filing was rejected on technical and environmental grounds related to new filing requirements. FERC told Buccaneer to come back with a complete filing.

The two Florida pipeline projects have become the guinea pigs for new filing procedures requiring a tremendous amount of work to be done up front on new projects. Both Gulfstream and Buccaneer have been wooing Florida residents and landowners for months, hoping to allay environmental and safety concerns and to build a solid base of material to bring to FERC.

The Gulfstream project planners already have met with more than 150 agencies, held more than 20 open houses and town meetings with numerous landowners, community leaders and other interested parties and environmental groups, and spent more than $7 million on environmental surveys and related work.

Houston-based Coastal hired Florida-born football star and sportscaster Pat Summerall to pitch its 1.1 Bcf/d Gulfstream in Florida radio and television spots.

Tampa Tribune columnist Tom Jackson attended a Buccaneer open house in June. "Williams brought every manner of expert at the company's disposal, including engineers, environmentalists, real estate and financial advisers and a publicist, and all were on their best behavior," Jackson wrote.

Because of new Commission requirements, Gulfstream's filing is one of the largest ever initial pipeline applications. "The Federal Energy Regulatory Commission has promulgated some new orders, and for the first time now is requiring a substantial amount of up-front work done, particularly in the environmental area, before you can make a filing. So as far as an initial filing, this is probably one of the most extensive ones we or anybody has ever made," Coastal CEO David A. Arledge said last week at a Washington, D.C. press conference.

Arledge said the new FERC-required procedures will have a serious impact on the pipeline industry because they make new projects more expensive and more risky. "It's clear that under the new order now, before projects are filed it's going to take more time and cost more money. As projects are thought about and planned in the future, the time and costs are going to be much greater," said Arledge. "[Pipeline companies] are going to be required to take more risk because you are going to have to spend more time and money before you can actually file the projects in the future."

FERC sent Buccaneer back home last week because it had not met the new filing requirements and had not filed simultaneous applications with the Minerals Management Service and the U.S. Army Corps of Engineers. If FERC staff is to work quickly with the other agencies on the application, those agencies must have it on file, the Commission told Buccaneer. FERC also said the filing was incomplete in a host of environmental areas. It lacked certification that it complies with the Coastal Zone Management Act. It failed to include endangered species and habitat surveys, as well as reference to required consultations with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service. It also failed to identify or describe non-jurisdictional facilities to be built by others for the project, FERC said. In the past, many of those things were done months after an initial filing was made.

Coastal CEO Arledge said his company is better prepared. "We think we've met all the requirements necessary for the filings that were made, yes," said Arledge. "We've spent the extra time, money and effort to comply with this new [FERC policy]."

"I don't want to get into a fight with Buccaneer," he said. "Let's just talk about why ours is going to be built first. We're making the filing today and ours will be the only filing on file at the present time. The second thing is we have the customer support, we have the community support and it's the right thing at the right time. Once we have the permits, we're ready to build it and it's going to go forward."

The early dialogue with the public and with regulators and interested parties also helped Gulfstream planners take into account landowner suggestions and gradually narrow the pipeline study corridor from the initial three mile wide study area to the current 300-foot wide study area. Construction of the $1.6 billion Gulfstream is scheduled to begin in June 2001 and will have a targeted in-service date of June 2002.

The company's filing includes a proposal for Florida landfall at Port Manatee, an area where at least one environmentalist has raised concerns for the effect the project would have on sea grasses. "Our techniques, including horizontal drilling, completely avoid sea grass," Coastal said. Nevertheless, the Gulfstream filing includes two alternate landfall points. The 744-mile Gulfstream would originate near Mobile, AL, and cross the Gulf of Mexico with more than 400 miles of 36-inch diameter pipeline to Manatee County, FL. In Florida, 292 miles of mainline and laterals, ranging in diameter from 16 inches to 36 inches, are planned to deliver gas to fuel new electric generation capacity throughout the state. The mainline terminates in Palm Beach County along Florida's East Coast.

"Through interconnections with others, Gulfstream shippers will have reliable access to more than 2 Bcf/d of gas supplies sourced from supply basins in the U.S. and Canada," said Arledge. Coastal said 10 non-affiliated utility and power production customers have made long-term, binding commitments for Gulfstream capacity. Arledge would not say just how much capacity the "binding commitments" represent, nor would he name the customers who are under contract. "With the capacity that has been subscribed with binding long-term commitments and the capacity that we're about to sign up very soon, it is sufficient for us to begin construction once we receive all the regulatory permits and meet all requirements."

Florida will require more than 9,600 MW of new power generating capacity by 2007, according to the Florida Public Service Commission's "Review of Electric Utility 1998 Ten-Year Site Plans." When completed, the Gulfstream system will have the capacity to deliver sufficient gas to produce electricity for more than 50% of the state's additional megawatt requirements.

"Coastal has a clearly defined growth strategy with specific projects and plans that are being coordinated with the Gulfstream project," Arledge said. "Our power production division will have opportunities to develop projects in Florida, and the exploration and production division has the opportunity to expand existing gas supplies in the Gulf of Mexico for delivery to the project."

Another competitor targeting Florida is Duke Energy's land-based Sawgrass pipeline, which plans to have an open season early next year and file with the FERC shortly thereafter. Also pending are two expansions of Florida Gas Transmission (FGT), which has a monopoly on interstate gas transportation into Florida. FGT Phase IV is expected to begin construction this spring. A FERC filing for Phase V is expected at the beginning of December.

Arledge said there's an estimated need for 2 Bcf/d of additional gas demand in Florida by 2007 but there's probably only going to be one new pipeline built. "The combination of the expansion of our pipeline and reasonable smaller expansions of the existing pipelines in Florida should take care of all of Florida's needs."

Joe Fisher, Houston; Rocco Canonica

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

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