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Released February 05, 2014 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Natural gas has become the fuel of choice for U.S. utilities developing new fossil-fuel electric generation. The "dash to gas" in the U.S. Electric Power market has led to significant investment in the nation's natural gas Pipeline network. Nowhere are both of these trends more evident than in the U.S. Southeast, where billions of dollars of pipeline projects are under development to serve billions of dollars of new and planned natural-gas fired generation.
Florida uses more natural gas to generate electricity than any U.S. state other than Texas, according to Florida Power & Light (FPL) (Juno Beach, Florida), a unit of Next Era Energy Incorporated (NYSE:NEE) (Juno Beach, Florida). But the Sunshine State has minimal in-state gas production, no storage capabilities and only two major pipeline systems available to transport natural gas to its peninsula. Both existing pipeline systems are approaching full capacity. Given FPL's aggressive move to gas-fired generation in recent years, a major new pipeline was needed.
The largest gas pipeline under development in the Southeast is the Sabal Trail project, a $3 billion project that will extend for 474 miles, from eastern Alabama through southwestern Georgia and down the middle of Florida. The 36-inch-diameter pipeline will connect with two other smaller pipeline projects under development to bring as much as 1.1 billion cubic feet of gas per day to gas-fired power plants operated by FPL.
Click on the image at right for a proposed route map for the Sabal Trail gas pipeline.
FPL has made an aggressive move into gas-fired generation in recent years, partly to meet forecast load growth and partly to replace capacity closed due to tougher environmental regulation. FPL has committed to spend more than $4 billion to tear down three old, oil-fired generators and replace them with 3,500 megawatts (MW) of new natural-gas, combined-cycle (NGCC) generation capacity. For more information on FPL's big bet on gas, see January 20, 2012, article - FPL Capital Program Bets Big On Low Natural-Gas Prices.
Interstate pipeline capacity into the Sunshine State has long been limited, but with Sabal Trail, FPL and its parent NEE are taking bold steps to change that. And rival Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) may benefit as well.
Sabal Trail, a 50:50 joint venture between NextEra and Spectra Energy Corporation (NYSE:SE) (Houston, Texas), held dozens of public meetings about the project during the fourth quarter of 2013, Spectra spokesperson Andrea Grover told Industrial Info. She said the meetings, attended by hundreds of people, focused on the project's scope, schedule and route, how the project would affect nearby property owners, environmental issues and safety.
Assuming Sabal Trail secures regulatory support at the state and federal levels, construction is scheduled to kick off in early 2016, and gas will be flowing by mid-2017, she said. Because the project will cross state lines, the Sabal Trail project requires approval from the Federal Energy Regulatory Commission (FERC) (Washington, D.C.). Sabal Trail will file its application with FERC in late 2014, and a decision is expected by the end of 2015, Grover said. Approvals also are being sought from regulators in Florida, Georgia and Alabama.
FPL issued a request for proposal (RFP) for new pipeline capacity in late 2012. Last July, the utility selected the Sabal Trail project. On winning the bid, Bill Yardley, president of Spectra's U.S. transmission and storage division, said: "Spectra Energy is extremely pleased to have secured the bid to build and operate this interstate natural gas pipeline. We are excited to work with FPL and NextEra Energy to bring this critically needed third interstate natural gas pipeline into Florida, which will provide safe, clean burning, affordable natural gas to power the state's homes, businesses and economy."
Sabal Trail has three phases. About 818 million cubic feet of gas per day (MMcf/d) will flow once Phase I is completed in 2017. When all three phases are complete, capacity will reach about 1.1 billion cubic feet per day (Bcf/d). U.S. natural gas production is about 95 Bcf/d today, so the Sabal Trail will have the ability to carry about 1% of overall U.S. gas production. The pipeline will originate in Tallapoosa County, Alabama, and terminate at the Central Florida Hub near Orlando, Florida.
But two other, smaller, proposed pipelines are needed to actually get the gas to FPL's power plants. Transco will need to build the Hillabee Expansion Project to get gas from Choctaw County, Alabama, to Tallapoosa County, Alabama, where it will enter Sabal Trail. And NextEra Energy will build a pipeline, the Florida Southeast Connector, to bring gas from central Florida to FPL's Martin Clean Energy Center. NextEra will spend about $550 million to build the 126-mile Florida Southeast Connector line.
Click on the image at right to see a map of all three proposed pipelines.
"At FPL, we have worked hard to reduce our dependence on foreign oil and to keep our customers' bills low," said FPL President Eric Silagy last July in announcing the selection of Sabal Trail and NEE's decision to build the Florida Southeast Connector. "Since 2001, our investments in cleaner, more efficient, natural gas power plants have saved our customers more than $6 billion on fuel costs. To continue meeting the growing needs of our customers efficiently and reliably in the years ahead, we will need more natural gas than the two existing major pipelines can deliver, which makes a third, independently routed pipeline system absolutely essential."
How would Duke Energy benefit from Sabal Trail? The proposed route for the pipeline comes within about 24 miles of a site for a future 1,640-megawatt, gas-fired power plant in Citrus County, Florida. Duke is assessing responses to its RFP for this proposed power plant, which will be needed because Duke has closed its Crystal River nuclear generator, as well as two coal-fired units at Crystal River that Duke plans to close. For more on that project, see December 11, 2013, article - Duke Energy Seeks New Gas Generation, but Keeps Nuclear on its Screen. Grover said the companies are discussing plans to build a line from Sabal Trail to Citrus County.
Natural gas production in the U.S. is projected to surge, which should moderate upward price pressure stemming from strong forecast demand growth by generators, according to the latest projection from consultants Black & Veatch (Overland Park, Kanas). For more on that projection, see January 24, 2014, article - Black & Veatch Sees Doubling of Natural Gas Use by U.S. Power Industry.
The Sabal Trail pipeline could transport gas produced anywhere in the U.S. Some of that gas may come from the Haynesville Shale, a large formation on the Louisiana/Texas border, where development has lagged in recent years due to low gas prices. Most of the gas produced in the Haynesville is "dry," meaning it contains little crude oil or natural gas liquids (NGLs), which significantly increase the economic value of gas produced in "wetter" formations like the Eagle Ford and Bakken shales. And the Haynesville's gas is located farther underground than other formations, like the Marcellus, resulting in significantly higher drilling costs. For more on the Haynesville, see July 16, 2013, article - After the Land Rush: Exco Doubles Down on Haynesville Shale.
"Florida certainly needs new gas pipeline capacity to bring fuel to all the gas generation it wants to build," remarked Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Transmission and Terminals industries. "And natural gas production continues to grow. Sabal Trail may be the link that creates a lot of value in Florida, Louisiana and elsewhere in the Southeast. Incremental demand for gas could be enough to stimulate more production in the Haynesville, even absent price increases."
View Plant Profile - 3097323 3097839 3097587 3092684 3010042 1007306
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Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Florida uses more natural gas to generate electricity than any U.S. state other than Texas, according to Florida Power & Light (FPL) (Juno Beach, Florida), a unit of Next Era Energy Incorporated (NYSE:NEE) (Juno Beach, Florida). But the Sunshine State has minimal in-state gas production, no storage capabilities and only two major pipeline systems available to transport natural gas to its peninsula. Both existing pipeline systems are approaching full capacity. Given FPL's aggressive move to gas-fired generation in recent years, a major new pipeline was needed.
The largest gas pipeline under development in the Southeast is the Sabal Trail project, a $3 billion project that will extend for 474 miles, from eastern Alabama through southwestern Georgia and down the middle of Florida. The 36-inch-diameter pipeline will connect with two other smaller pipeline projects under development to bring as much as 1.1 billion cubic feet of gas per day to gas-fired power plants operated by FPL.
Click on the image at right for a proposed route map for the Sabal Trail gas pipeline.FPL has made an aggressive move into gas-fired generation in recent years, partly to meet forecast load growth and partly to replace capacity closed due to tougher environmental regulation. FPL has committed to spend more than $4 billion to tear down three old, oil-fired generators and replace them with 3,500 megawatts (MW) of new natural-gas, combined-cycle (NGCC) generation capacity. For more information on FPL's big bet on gas, see January 20, 2012, article - FPL Capital Program Bets Big On Low Natural-Gas Prices.
Interstate pipeline capacity into the Sunshine State has long been limited, but with Sabal Trail, FPL and its parent NEE are taking bold steps to change that. And rival Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) may benefit as well.
Sabal Trail, a 50:50 joint venture between NextEra and Spectra Energy Corporation (NYSE:SE) (Houston, Texas), held dozens of public meetings about the project during the fourth quarter of 2013, Spectra spokesperson Andrea Grover told Industrial Info. She said the meetings, attended by hundreds of people, focused on the project's scope, schedule and route, how the project would affect nearby property owners, environmental issues and safety.
Assuming Sabal Trail secures regulatory support at the state and federal levels, construction is scheduled to kick off in early 2016, and gas will be flowing by mid-2017, she said. Because the project will cross state lines, the Sabal Trail project requires approval from the Federal Energy Regulatory Commission (FERC) (Washington, D.C.). Sabal Trail will file its application with FERC in late 2014, and a decision is expected by the end of 2015, Grover said. Approvals also are being sought from regulators in Florida, Georgia and Alabama.
FPL issued a request for proposal (RFP) for new pipeline capacity in late 2012. Last July, the utility selected the Sabal Trail project. On winning the bid, Bill Yardley, president of Spectra's U.S. transmission and storage division, said: "Spectra Energy is extremely pleased to have secured the bid to build and operate this interstate natural gas pipeline. We are excited to work with FPL and NextEra Energy to bring this critically needed third interstate natural gas pipeline into Florida, which will provide safe, clean burning, affordable natural gas to power the state's homes, businesses and economy."
Sabal Trail has three phases. About 818 million cubic feet of gas per day (MMcf/d) will flow once Phase I is completed in 2017. When all three phases are complete, capacity will reach about 1.1 billion cubic feet per day (Bcf/d). U.S. natural gas production is about 95 Bcf/d today, so the Sabal Trail will have the ability to carry about 1% of overall U.S. gas production. The pipeline will originate in Tallapoosa County, Alabama, and terminate at the Central Florida Hub near Orlando, Florida.
But two other, smaller, proposed pipelines are needed to actually get the gas to FPL's power plants. Transco will need to build the Hillabee Expansion Project to get gas from Choctaw County, Alabama, to Tallapoosa County, Alabama, where it will enter Sabal Trail. And NextEra Energy will build a pipeline, the Florida Southeast Connector, to bring gas from central Florida to FPL's Martin Clean Energy Center. NextEra will spend about $550 million to build the 126-mile Florida Southeast Connector line.
Click on the image at right to see a map of all three proposed pipelines."At FPL, we have worked hard to reduce our dependence on foreign oil and to keep our customers' bills low," said FPL President Eric Silagy last July in announcing the selection of Sabal Trail and NEE's decision to build the Florida Southeast Connector. "Since 2001, our investments in cleaner, more efficient, natural gas power plants have saved our customers more than $6 billion on fuel costs. To continue meeting the growing needs of our customers efficiently and reliably in the years ahead, we will need more natural gas than the two existing major pipelines can deliver, which makes a third, independently routed pipeline system absolutely essential."
How would Duke Energy benefit from Sabal Trail? The proposed route for the pipeline comes within about 24 miles of a site for a future 1,640-megawatt, gas-fired power plant in Citrus County, Florida. Duke is assessing responses to its RFP for this proposed power plant, which will be needed because Duke has closed its Crystal River nuclear generator, as well as two coal-fired units at Crystal River that Duke plans to close. For more on that project, see December 11, 2013, article - Duke Energy Seeks New Gas Generation, but Keeps Nuclear on its Screen. Grover said the companies are discussing plans to build a line from Sabal Trail to Citrus County.
Natural gas production in the U.S. is projected to surge, which should moderate upward price pressure stemming from strong forecast demand growth by generators, according to the latest projection from consultants Black & Veatch (Overland Park, Kanas). For more on that projection, see January 24, 2014, article - Black & Veatch Sees Doubling of Natural Gas Use by U.S. Power Industry.
The Sabal Trail pipeline could transport gas produced anywhere in the U.S. Some of that gas may come from the Haynesville Shale, a large formation on the Louisiana/Texas border, where development has lagged in recent years due to low gas prices. Most of the gas produced in the Haynesville is "dry," meaning it contains little crude oil or natural gas liquids (NGLs), which significantly increase the economic value of gas produced in "wetter" formations like the Eagle Ford and Bakken shales. And the Haynesville's gas is located farther underground than other formations, like the Marcellus, resulting in significantly higher drilling costs. For more on the Haynesville, see July 16, 2013, article - After the Land Rush: Exco Doubles Down on Haynesville Shale.
"Florida certainly needs new gas pipeline capacity to bring fuel to all the gas generation it wants to build," remarked Jesus Davis, Industrial Info's vice president of research for Oil & Gas Production, Transmission and Terminals industries. "And natural gas production continues to grow. Sabal Trail may be the link that creates a lot of value in Florida, Louisiana and elsewhere in the Southeast. Incremental demand for gas could be enough to stimulate more production in the Haynesville, even absent price increases."
View Plant Profile - 3097323 3097839 3097587 3092684 3010042 1007306
View Project Report - 300122673 300130195 300130197 300130204 300130048 300129911 300130082 300130200 300122682 300128616 300123415
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and nine international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
