Tractebel is in the process of buying bankrupt Enron Corp.’s proposed LNG terminal in the Bahamas and the associated $132 million Bahamas-to-Broward County, FL, Calypso pipeline project, which would bring the regasified liquefied natural gas to the U.S. pipeline grid. A Tractebel spokeswoman said the deal should be completed by this week following bankruptcy court review last Thursday.

However, Tractebel faces stiff competition with two other projects that have gained ground while the Calypso pipeline certificate application has gathered dust at FERC during the past year.

Tractebel, a subsidiary of the French water and energy company Suez and the owner of the Cabot LNG import terminal in Everett, MA, would assume ownership of a 54-mile pipeline designed to bring up to 832,000 MMBtu/d of regasified LNG from a proposed import terminal in Freeport, Grand Bahama to a connection with Florida Gas Transmission (FGT) in central Broward County. The pipeline would include 36 miles of 24-inch diameter offshore pipeline and 5.8 miles of 24-inch onshore pipe, connecting into FGT’s Fort Lauderdale system. It has a projected in-service date of Oct. 1, 2004 but that appears to be optimistic. The pipeline’s two competitors, El Paso Corp. and AES Corp., now expect service to being on their systems in 2005.

El Paso’s $226 million, 162-mile pipeline would have the capacity to deliver up to 700 MMcf/d of natural gas to its pipeline affiliate, FGT, on the coast. The Seafarer Pipeline would include an 88-mile international line from an LNG terminal at South Riding Point on Grand Bahama to the boundary of the U.S. Exclusive Economic Zone (EEZ) and a 37-mile FERC-regulated pipeline to the Port of Palm Beach and to interconnection with FGT (see NGI, May 27).

In comparison, AES Corp. would build an LNG terminal on a 90-acre island it bought in the Bahamas and the Ocean Express Pipeline would transport the regasified LNG to Fort Lauderdale in southern Florida, where it would interconnect with FGT. The majority of the proposed 800,000 MMBtu/d pipeline — an estimated 68 miles — would be under water and 41 miles of the line would be located in U.S. waters and would be under FERC jurisdiction, while the remainder would be regulated by the Bahamas (see NGI, March 11).

AES’s Erin Samson, vice president of AES Coral and director the Bahamas project at AES, said the Ocean Express pipeline is further along than its competitors in the regulatory process and AES’s LNG terminal plan has a greater chance of becoming reality than the Tractebel LNG terminal in Freeport, a heavily populated area with significant tourism. AES bought an uninhabited island on which to build its terminal, and the distance to Florida is much shorter, he noted.

“We’ve got all of what we need to get through development funded; it’s actually third party funding, as part of the process with all the cutbacks [at AES],” Samson said in an interview with NGI. “To some extent this is definitely a horse race and I think we are a couple of leagues ahead of everybody… I think we have a huge advantage in the Bahamas.”

AES also has a head start on negotiations with the Navy over the proposed route of its pipeline (and Calypso’s) through a submarine warfare testing zone and an inert minefield. “I think we finally have most of that resolved,” said Samson. He said AES agreed to reroute three miles of its pipeline and change the pipe material to stainless steel from carbon steel to avoid interfering with the Navy’s magnetic and acoustical testing. However, Calypso has not dealt with any of those issues.

Spokeswoman Paula J. Rockstroh said Tractebel is more than up to the task, however. She said it was premature to discuss the Navy’s concerns because Tractebel’s purchase hasn’t even been completed yet. However, she said Tractebel’s experience handling the often intense security concerns in Boston over LNG shipping to its Everett, MA, terminal have more than prepared the company for dealing with similar issues in Freeport. She also believes there’s adequate market in Florida for more than one LNG project.

Samson noted that with an additional 2 Bcf/d of incremental demand growth expected by 2010, Florida could support two LNG projects with staggered in-service dates. He also said that any LNG project also could serve other U.S. markets by backhauling up the pipeline grid.

However, all three projects face stiff environmental opposition, including scrutiny from state and county environmental regulators over potential effects on the sensitive coral reefs off Broward County. Heavy construction work, with pipes being dragged along the ocean floor, could endanger delicate networks of coral and sponges that draw hordes of divers and tourists to Florida’s waters. The U.S. Naval also hasn’t reported that it is satisfied with the changes proposed by AES, and Calypso has yet to address the Navy’s concerns.

El Paso’s Seafarer project route would bypass the Navy’s testing area and make landfall near Palm Beach. Its LNG facility also would be located outside of Freeport so it may avoid the more intense security and safety issues. In addition, Kathleen Eisbrenner, chief commercial officer at El Paso Global LNG, said El Paso expects to file a much more complete application than its competitors in December.

“Why are we taking longer than others? The real answer is it’s one thing to make a filing like Enron did with Calypso — here’s a pipe in the middle of the ocean, can’t quite define where, and here’s the end of the pipe into the Florida system, but I can’t quite tell where. I couldn’t get comfortable submitting any kind of bid on that pipeline filing. In contrast, what the Seafarer project has done is completely understand and work with FERC on what the expedited treatment requirements are for a very full blown evaluation of that project and incorporate that prefiling, so that when we file in December we will have everything addressed in contrast to the Calypso filing so that we can get expedited treatment from FERC.”

The government of the Bahamas already has said it would support all the projects if they meet U.S. guidelines on environmental and safety issues. But, all three projects face significant hurdles ahead and it is unlikely any of them will be built before the fall of 2005.

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