Duke Energy and Williams Gas Pipeline are “pressing very hard”to wrap up their purchase of the proposed Gulfstream Natural GasSystem project, a 743-mile natural gas pipeline planned forFlorida, from The Coastal Corp. by the end of this week, accordingto a source close to the negotiations.

“The actual deal has not closed, but it should be any day now.It could be this week,” the insider said. “There are some finalthings — administrative-type [matters] — that have to be donebefore the deal officially closes.”

Duke and Williams stepped up their efforts to complete the dealafter the Federal Trade Commission (FTC) on Monday authorized themega-merger of El Paso Energy and Coastal (see Daily GPI, Jan. 30). As a condition to the merger,the agency ordered Coastal to divest itself of the Gulfstream projectso as to eliminate any potential competitive concerns in the Floridagas pipeline market. It took this action because El Paso alreadyjointly owns Florida Gas Transmission, the sole gas pipeline currentlyserving the Sunshine State.

As part of a consent decree, the FTC directed El Paso andCoastal to provide consulting services to Duke and Williams at a”reasonable rate” until June 2002 to ensure that the project meetsits targeted in-service date of June 1, 2002.

Duke Energy and Williams announced last November that they hadreached an agreement to purchase 100% of Coastal’s interest in theGulfstream project and ditch their competing Buccaneer Pipelineproject for Florida (see Daily GPI, Nov. 22,2000). A Duke Energy official at the time indicated Gulfstreamwould provide the partners with a “quicker” entry into the Floridamarket than Buccaner. The partners have declined to reveal thepurchase price. But the project price — the “total cost once thepipeline is laid in the ground” — has been pegged at $1.6 billion.

So far, the proposed Gulfstream pipeline has been awardedpreliminary approval by FERC, and last week it received the finalenvironmental go-ahead from the Commission. Both findings attach tothe project, not to the sponsor. Thus, Duke and Williams will bebuying a pipeline project that is only one step away from beingcertified.

In its final environmental impact statement (FEIS), theCommission found that the Gulfstream project would result in”limited adverse environmental impacts,” provided that mitigationmeasures are employed. FERC said it issued a favorable FEIS becausenearly 76% of the onshore segment of the pipeline would be locatedadjacent to existing rights-of-way; Gulfstream would implementconstruction and restoration procedures; an environmentalinspection and mitgation-monitoring program would ensure compliancewith all mitigation measures; specialized offshore constructionprocedures would substantially reduce impacts on live bottom areas;and project sponsors have assured FERC they would comply withseveral federal laws before starting construction on any part ofthe proposed pipeline.

The proposed Gulstream project would run from supply areas inAlabama and Mississippi across the Gulf of Mexico and would comeashore on the west coast of Florida near Tampa, delivering up to1.13 Bcf/d of gas to new gas-fired generation facilities in centraland eastern Florida.

The state has forecast that about 10,000 MW of new generationcapacity will be built in Florida between now and 2010, which wouldboost gas demand by approximately 1.6 Bcf/d.

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