As was expected, Duke Energy and Williams Gas Pipeline announcedyesterday that they closed on the deal to buy Gulfstream NaturalGas System project, a 743-mile natural gas pipeline planned forFlorida, from The Coastal Corp. Terms of the transaction were notdisclosed.

The companies anticipate that the Federal Energy RegulatoryCommission will certify the $1.6 billion long-line pipeline projectwithin the next month, enabling them to begin construction by June2001. Gulfstream received the final environmental go-ahead for theproposed line from the Commission earlier this week. The targetedin-service date for the project, which would introducepipeline-on-pipeline competition into the Florida market for thefirst time, is June 2002.

Duke Energy and Williams stepped up their efforts to completethe Gulfstream purchase after the Federal Trade Commission (FTC) onMonday authorized the mega-merger of El Paso Energy and Coastal(see Daily GPI, Jan. 30, 2001). As a condition to the merger, theagency ordered Coastal to divest itself of the Gulfstream projectso as to eliminate any potential competitive concerns in theFlorida pipeline market. It took this action because El Pasoalready jointly owns Florida Gas Transmission, the sole pipelinecurrently serving the Sunshine State.

Duke Energy and Williams first announced that they had reachedan agreement to purchase 100% of Coastal’s interest in Gulfstreamlast November. The companies initially had planned to build theBuccaneer Pipeline that would have competed with Gulfstream inFlorida, but they have since shelved those plans.

Gulfstream is “approaching being fully subscribed,” said GuyBuckley, senior vice president of the project. He estimated thatmore than 24 customers, mostly utilities and power generators, haveentered into agreements for capacity on the proposed pipeline.

The proposed Gulfstream pipeline would run from supply areas inAlabama and Mississippi across the Gulf of Mexico and would comeashore on the west coast of Florida near Tampa. It’s estimated thatmore than half of the line — 400 miles — will be in federaloffshore waters. It will deliver up to 1.13 Bcf/d of natural gas tonew gas-fired generation plants in central and eastern Florida.

Florida anticipates that about 10,000 MW of new generationcapacity will be built in the state between now and 2010, whichwould boost gas demand by approximately 1.6 Bcf/d.

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