NGI The Weekly Gas Market Report
Florida Power and Light Co. (FPL) has signed on as the anchor shipper on a proposed Florida Gas Transmission Co. (FGT) expansion through a 25-year service agreement for 400 MMcf/d of capacity, FGT said last week.
The pipeline company said it will seek regulatory approval to build its proposed Phase VIII system expansion at an estimated cost of $2 billion to provide approximately 800 MMcf/d of additional capacity into Florida. Phase VIII would include construction of approximately 500 miles of large-diameter pipeline and the installation of approximately 170,000 hp of compression. Pending regulatory approvals, FGT is anticipating a spring 2011 in-service date. The project is expected to be financed through cash flows from operations and debt at both the FGT and Citrus Corp. entity levels.
The Phase VIII expansion would increase the capacity of FGT’s mainline from the Mobile Bay, AL, area to southern Florida to provide additional firm transportation service throughout Florida to meet the state’s rising energy demand. FGT previously announced an open season, which ended Friday, under which capacity was available on the Phase VIII expansion (see NGI, Jan. 21).
“With this commitment from Florida Power and Light, we have made the final investment decision to go forward with the Phase VIII expansion, subject to obtaining regulatory approvals,” said Bob Hayes, FGT chief commercial officer. “Florida needs more generation capacity to meet the growing electric demand. Currently, 85% of the natural gas consumed in Florida is used for electric generation. FGT’s Phase VIII expansion could help the state’s utilities meet Florida’s increasing energy needs because natural gas demand in the Florida peninsula is projected to grow over 1 Bcf/d by 2015.”
The Florida customer base of FGT includes electric utilities, independent power producers, industrials and local distribution companies. Last summer Florida’s governor signed an executive order directing the adoption of maximum emission levels of greenhouse gases by electric utilities operating in Florida that would equal the emissions levels of 2000 by 2017 and 1990 levels by 2025. Natural gas-fired power generation, which accounts for about 30% of statewide energy consumption, is expected to increase to more than 44% over the next decade, the Florida Department of Environmental Protection said in a report published in 2006.
FGT’s Phase VII expansion was to connect the pipeline with Cypress Pipeline near Jacksonville, FL, to bring regasified LNG to Florida (see NGI, June 26, 2006). FGT, a subsidiary of Citrus, operates a 5,000-mile gas pipeline system extending from South Texas to South Florida with mainline capacity of 2.1 Bcf/d. Citrus is 50% owned by Southern Union Co. and 50% owned by El Paso Corp. FPL was FGT’s anchor customer when the pipeline was built into Florida in 1959.
FPL, an FPL Group company, is the largest investor-owned electric utility in Florida. Natural gas is used to generate about half of the power the utility produces. In 2006 FPL’s average number of customer accounts grew by 88,000 to more than 4.4 million, according to the FPL website.
Last summer the Federal Energy Regulatory Commission issued a final environmental impact statement for the Southeast Supply Header, a 270-mile pipeline to connect the Perryville Hub in northeast Louisiana with Gulfstream Natural Gas near Mobile County, AL. The line would carry up to 1.14 Bcf/d destined for southeastern markets, including Florida (see NGI, Aug. 13, 2007). Customers signed up for capacity include FPL, Progress Energy, Southern Co., Tampa Electric and EOG Resources.
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