FERC granted a certificate and presidential permit last week to Tractebel’s $132 million Calypso Pipeline, the U.S. portion of an international pipeline project that would deliver gas to the Florida peninsula from a proposed LNG terminal in the Bahamas. The terminal is expected to be approved this summer by officials in the Bahamas.

The U.S. portion of the project would include 36 miles of 24-inch diameter offshore pipeline facilities and 5.8 miles of 24-inch onshore pipeline. It would transport up to 832,000 MMBtu/d of gas to a connection with Florida Gas Transmission (FGT) in central Broward County from a connection with a non-jurisdictional line at the exclusive economic zone international boundary. The U.S. segment of the pipeline would make landfall at Port Everglades, Florida, then travel onshore to a proposed interconnection with FGT adjacent to Florida Power & Light’s (FP&L) Lauderdale power plant.

The Commission has given Tractebel Calypso up to three years from the date of the certificate — rather than the typical two years — to complete the 41.9-mile pipeline. Tractebel sought the additional time to accommodate the Bahamian portion of the project, which includes an affiliate’s new LNG terminal in Freeport, Grand Bahama and the connecting Bahamian pipeline. It said while it expected to complete construction of the U.S. portion of the pipeline in 15 months, construction of the Freeport LNG terminal and the Bahamian leg of the line would take up to 32 months.

“I think this is a fascinating project,” said Commissioner Nora Brownell. She hopes that project sponsors and FERC can work closely with the state of Florida to satisfy any environmental concerns so the project can move forward.

“The FERC’s green light underscores Tractebel’s commitment to complete this project in a sound and environmentally prudent manner,” said William P. Utt, CEO of Tractebel North America, Inc. “We’re one step closer to bringing clean-burning natural gas to Florida to help meet its increased fuel needs by 2007.”

Pre-construction activities are under way for the pipeline project, with construction expected to begin this summer. Tractebel anticipates initial gas deliveries to begin in 2007.

The state governor and cabinet still have to approve an easement for submerged lands for the project. They are expected to make their ruling on April 13. The state also still has to issue its environmental resource permit.

Calypso Project Director Jim Ebeling said the state has been “firm and diligent,” but has “worked to reach a solution… I haven’t seen anything that would appear to give the project a problem.” Even among local groups at the pipeline landfall location, Ebeling said there “hasn’t been an overwhelming swell of opposition.”

Regarding a market for the capacity and gas supply, however, the outlook is pretty cloudy at this point. Calypso is the second Bahamas pipeline project approved this year by FERC. In January, the Commission granted AES Ocean Express LLC a certificate and presidential permit to build the 54-mile U.S. leg of a $440 million pipeline that would transport 842 MMcf/d of gas to southern Florida from a proposed LNG import terminal in the Bahamas. AES is dredging sand and soil to create its own 90-acre industrial island, called Ocean Cay, for its LNG plant.

But El Paso also is still moving forward with its Seafarer pipeline, a 750 MMcf/d project that would deliver gas from a Bahamas LNG terminal to southern Florida. Although El Paso’s project is behind in the regulatory process, it recently gained a key market ally in FPL Group, parent company of Florida’s largest electric utility, FP&L, which could give it an edge over the other projects. FPL Group holds an option to take a large stake in El Paso’s project.

Meanwhile, the FP&L utility is expected to issue a request for proposals (RFP) for gas supply within the next month, the results of which could determine which LNG/pipeline projects move forward first.

“We are in discussions with other utilities and industrial gas users,” said Ebeling, adding that he could not disclose if Calypso had any signed precedent agreements yet with customers. “We are in negotiations with a number of entities and they are covered by confidentiality agreements which prevent us from talking about them. My lawyers would break my fingers if I said much more.”

Florida Power & Light spokeswoman Cathy Scott wouldn’t comment on the expected gas supply RFP. “I can tell you that if we were to buy gas from any of the LNG projects that are being proposed here in Florida, we would go through some kind of a competitive process for it. We’ve said for a long time that on behalf of our customers we certainly are interested in seeing more [supply] competition in Florida, additional natural gas resources in the state. That has to be beneficial to everyone. We are certainly very interested in these projects out there.

“Right now in our 10-year plan all of our future capacity additions are natural gas combined cycle units,” she noted. “I think we have something like 6,300 MW of new generation called for through 2012, so for now natural gas is the fuel of choice.”

Florida Gas Transmission and Gulfstream Natural Gas currently supply all of FP&L’s needs including the gas for its new Martin power plant expansion. “We have a 2007 project, the Turkey Point (1,100 MW) generating unit, which is going through licensing and permitting currently, so no [supply] contract has been done there,” said Scott, noting, however, that the FGT system will be connected to the power plant. That does not rule out LNG providing additional supply to all of these plants, she said. FP&L is expecting that three additional 1,100 MW combined cycle power plants will be built before 2012.

In an interview with NGI last week, AES spokesman Scott Cunningham said his company is confident that more than one LNG terminal and gas pipeline project will be built. “I think that the decision [FP&L] will have to make as a regulated utility is what has the best economics for the ratepayers in Florida… The plans that the state had identified suggested for some time that the gas requirements for Florida over the next 10-15 years are going to justify several LNG terminals. From our standpoint we don’t think it is a one-terminal solution.”

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