Pipeline construction season has officially begun as two natural gas pipeline companies formally announced on Tuesday their new proposed projects for the Southeastern region’s gas needs. As Southern Natural Gas Co. unveiled its intentions to expand its Sonat system for the third time in the last year to supply incremental demand in Alabama, Georgia and South Carolina, Duke Energy Gas Transmission (DEGT) launched a month-long open season to determine market interest in a new natural gas supply and transportation option called the Alabama-Georgia Energy System.

The Sonat expansion — which will include both pipeline looping and compression — is expected to be primarily used to supply new gas-fired power generation plants in the Southeast, while the DEGT project has the similar goal of supplying gas to new generation facilities in the Southeast, as well as serving industrial demand in Alabama and Georgia.

Whether the Southeast market can supply the gas demand to make both projects viable remains to be seen.

Refraining from speculation on DEGT’s proposed project, El Paso spokesman Aaron Woods said his company is confident that the third Sonat expansion will be approved by the Federal Energy Regulatory Commission (FERC) because of the need for increased levels of natural gas in the region. He added that the commitments from shippers and power producers on the Sonat expansion has already shown that the demand is there.

Gretchen Krueger, a spokeswoman with Duke Energy Corp, said, “Well, I think that the market, as in any other pipeline project, will determine whether one or two projects are viable.”

Southern Natural Gas — an El Paso Corp. subsidiary — reported that it has already entered into binding long-term firm transportation agreements with various shippers for 267 MMcf/d. The company said it is currently preparing an application to submit to FERC, with the hopes of having the expansion in service by June 2003.

“Power generators are stepping up to the plate to build new power plants across the Deep South to meet increasing electricity demand,” said Jim Yardley, president of Southern Natural Gas. “They are choosing natural gas to fuel them, and we are able to expand our existing system in a timely manner to meet their requirements.”

DEGT’s Alabama-Georgia Energy System would consist of an interstate pipeline originating in the greater Mobile Bay area that would travel through the southern portion of both states. To keep up with the Southeastern Electric Reliability Council’s predictions that there will be a 25% increase in electric demand by 2008, DEGT’s project would initially deliver 250,000-to-500,000 Dth/d of firm transportation. Krueger said depending on market demand, the new system could be in service as soon as March 2003.

DEGT said the facilities would likely consist of 20-inch and 26-inch diameter pipeline and compression originating near the Destin Pipeline gas processing plant in Pascagoula, MS, and interconnecting with the Mobile Bay Processing Partners gas processing plant in Coden, AL, and other pipelines in the area before moving east into Georgia. DEGT noted that the project would consider the construction of laterals, where applicable, to reach markets along the path.

“According to several independent reports, the region served by the Southeastern Electric Reliability Council is in need of significant new generation capacity, and this increased demand is the direct result of unprecedented growth in the region,” said Robert B. Evans, DEGT’s president. “DEGT is excited about working with the region’s power producers and industrial customers in both states to provide the natural gas transportation service to meet this demand growth.”

Southern Natural — in addition to the expansion announced Tuesday — has previously committed to two other mainline system expansions recently (see Daily GPI, April 25). With the company’s three expansion projects to increase gas supply to new generators in the Southeast, Southern Natural expects to increase its capacity by 635 MMcf/d during 2002 and 2003 at an estimated capital cost of $350 million. The company also recently reported its intent to construct and operate the $240 million Cypress Pipeline system, which will transport 310 MMcf/d of vaporized LNG to Jacksonville, FL, from a recommissioned import terminal at Elba Island, GA (see Daily GPI, April 27).

DEGT’s open season runs until the close of business on May 31. For more information, contact Dave Weathers at (713) 627-4773.

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