FERC yesterday awarded a preliminary determination onnon-environmental issues to Florida Gas Transmission (FGT) for itslatest project to expand its existing 1.4 Bcf/d of transportationcapacity by nearly one-third.

The Commission ruled that the benefits of FGT’s proposed Phase Vexpansion, which would provide an additional 428,015 MMBtu/d ofcapacity for to the growing power generation market in Florida,outweighed any potential adverse effects that may result from the newconstruction (see Daily GPI, June 20).

At the same time, FERC said Koch Gateway Pipeline’s proposal tosell an undivided interest in its Mobile Bay Lateral assets to FGT aspart of the pipeline’s Phase V expansion was in the “publicconvenience and necessity” (see Daily GPI, Dec. 10, 1999). The lateral would provideFGT shippers with upstream access to 300,000 MMBtu/d of additionalcapacity, as well as access to all existing receipt and deliverypoints on the line. FGT proposes to build a 30-inch line to connectthe lateral to its system.

The Commission noted the Phase V expansion met two key”threshold” requirements for new projects: 1) FGT had demonstratedproject need, negotiating long-term contracts for 71.5% of theproposed capacity on an annual average basis; and 2) its proposalto roll in the project costs would reduce the rates for FTS-2shippers and not change the rates for FTS-1 shippers.

Rather than buying Koch’s undivided interest in the Mobile BayLateral, some shippers argued in favor of FGT either leasingcapacity from the lateral or acquiring unused capacity onTranscontinental Gas Pipeline’s system. But FGT countered that theformer option would probably be more expensive and the latter wouldrequire the construction of a significant amount of loopingfacilities. FERC agreed that FGT’s decision to buy Koch’s interestin the lateral “would be environmentally preferable and lessexpensive than the construction of a new pipeline.”

FGT’s Phase V expansion would add about 167 miles of 16-inch to30-inch mainline looping and laterals to the pipeline’s existingsystem of 4,900 miles, which extends from South Texas to Miami, FL.It also would add compression totaling 132,615 horsepower and otherassociated facilities in Mississippi, Alabama and Florida. Theproject has a targeted in-service date of Oct. 1, 2001.

The proposed expansion, assuming it receives final approval fromFERC, would further cement FGT’s monopoly position in the gastransportation market in the Sunshine State. But the pipeline couldbe in for some competition from Duke Energy and Williams bymid-2002. The two companies plan to buy the Gulfstream Natural GasSystem project from The Coastal Corp. to serve the growing gasappetite of power generators in Florida (see Daily GPI, Nov. 20).The Federal Trade Commission ordered Coastal to divest itsGulfstream project in light of its pending merger with El PasoEnergy, which owns 50% of FGT.

Reflecting the demand for the project, FGT has executed 20-yearfirm transportation service agreements with seven shippers for305,819 MMBtu/d of the expansion capacity on an annual averagebasis. The shippers include Southern Company, Florida Power &Light, Peoples Gas, Jacksonville Electric, the City of Tallahassee,Tampa Electric and U.S. Agri-Chemicals.

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