NGI The Weekly Gas Market Report
Because it’s a peninsula with limited access to gas pipelines, Florida is subject to supply volatility that can drive up prices under certain conditions such as when hurricanes threaten the Gulf of Mexico. A Houston-based start-up company has plans to capture some of that volatility with a new $325 million liquefied natural gas (LNG) peak-shaving storage facility.
Floridian Natural Gas Storage Co. LLC (FGS) intends to site its peak-shaving facility on the 145-acre Florida Steel Superfund Site in an industrial area near Indiantown, FL, in Martin County. The facility initially will consist of one above-ground, 185-foot-tall full containment liquid natural gas storage tank, refrigeration compressors and regasification equipment.
An open season for capacity in the first 4 million MMBtu (approximately 4 Bcf) tank concluded earlier this month and was oversubscribed. Floridian President Brad Williams said the company is now deciding whether to develop a second tank concurrently with the first for a total capacity of 8 million MMBtu. The size of the site will allow for a greenbelt around the plant. With two tanks, maximum sendout capacity would be 800,000 MMBtu/d. The facility would be capable of three turns per year.
The plant will be built by Chicago Bridge & Iron Co., which has built more than 40 LNG terminals and peak-shaving plants and 120 cryogenic LNG storage tanks around the world. Gas will be delivered to and from the facility via Florida’s two existing gas pipelines (Florida Gas Transmission and Gulfstream Natural Gas System LLC). Williams told NGI that one of the company’s requirements for the site it chose was that it would allow connections to both pipelines.
The venture is backed by Warburg Pincus, and Williams said another partner is not needed to move forward; however, a strategic partner would be considered should one step up.
LNG peak shaving is nothing new. It has been a critical part of natural gas supply infrastructure in the Northeast for decades. There are more than 20 LNG peak-shaving facilities in the Northeast alone (see NGI, Feb. 23, 2004).
There will be no shipments or pipeline deliveries of LNG from the coast. Williams said that during the planning and community relations outreach for the project, the area community did not show any resistance to the peak-shaving facility and did not confuse it with an LNG importation facility.
The peak-shaving plant will use electricity purchased from Florida Power and Light to run the compressors and other equipment. The FGS facility will have a small emergency backup generation package to enable it to send gas into the pipeline grid during emergencies.
According to Floridian, in 2004 approximately 30% of Florida’s electricity was generated using natural gas. The Florida Public Service Commission anticipates that more than 44% of the state’s generators will be powered by gas in 2014. However, Florida’s only current source of gas is Florida Gas Transmission and Gulfstream, which bring gas from Gulf Coast states to Florida. The capacity from these two pipelines is fully subscribed and will be fully utilized during peak periods by 2011, Floridian said.
Williams said the Floridian peak-shaving facility is the best alternative to the construction of an additional interstate pipeline to serve the Florida market.
During the construction phase of the project, approximately 350 workers will be employed. Post-construction staffing is estimated to be approximately 30 people. The planned construction date is early 2008 with commercial operation beginning in mid-2011.
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