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FPL selects Sabal Trail Transmission and Florida Southeast Connection to build new natural gas pipeline system into Florida
Florida Power & Light Company announced last week that its evaluation of proposals for additional natural gas transportation capacity determined that the best, most economical solution for ensuring Florida’s continued access to the clean, affordable, U.S.-produced fuel necessary to meet the growing electricity needs of the state’s residents and businesses is a combination of a natural gas pipeline and interconnection hub to be built by Sabal Trail Transmission, LLC, and a second natural gas pipeline to be built by Florida Southeast Connection, LLC.
FPL’s economic analysis showed that these projects will save FPL customers nearly $600 million compared with the next closest proposal.
Sabal Trail Transmission is a joint venture of Spectra Energy Corp (NYSE: SE) and NextEra Energy, Inc. (NYSE: NEE). Florida Southeast Connection is a wholly owned subsidiary of NextEra Energy.
Sabal Trail Transmission will invest roughly $3 billion in the construction of a new natural gas pipeline that will access the abundant reserves of various regions of the U.S. The Sabal Trail pipeline will originate in southwestern Alabama and transport natural gas to Georgia and Florida. It will terminate at a new Central Florida Hub south of Orlando, Fla., where it will interconnect with the two, existing natural gas pipelines that currently serve peninsular Florida. To connect with FPL’s operations, Florida Southeast Connection will invest approximately $550 million to construct a separate pipeline from Sabal Trail’s Central Florida Hub to FPL’s Martin Clean Energy Center in Indiantown, Fla.
“At FPL, we have worked hard to reduce our dependence on foreign oil and to keep our customers’ bills low. 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,” said FPL President Eric Silagy. “Natural gas is vital to the reliability and affordability of electricity in our state. Although Florida has essentially no natural gas reserves, many areas of our country have a wealth of supply. This project is not only about FPL and our customers – increasing access to clean, efficient, U.S.-produced natural gas will benefit the entire state.”
Florida uses more natural gas to generate electricity than any U.S. state other than Texas, but it has minimal production, no storage capabilities and only two major pipeline systems available to transport natural gas to the peninsula. Both of these pipeline systems are approaching full capacity. However, Florida’s economy is projected to require additional electricity – and, consequently, more natural gas – in the near future. To meet this need, the new pipeline system will be built to provide the state with additional natural gas transportation capacity beginning in May 2017.
FPL, the state’s largest electric utility and largest natural gas user, will be an anchor customer for the new pipelines. Other users will also be able to contract for capacity and benefit from the increased access to abundant domestic natural gas reserves. The proposed route of the new system will maximize accessibility to all of Florida’s major natural gas users and increase the overall reliability of the state’s natural gas transportation network.
“Natural gas, especially when used in combination with solar energy, generates far fewer emissions than coal or oil,” said Eric Draper, executive director of Audubon of Florida. “Audubon provided guidance on the proposed pipeline route, and we commend FPL for working to avoid sensitive habitats.”
The new pipeline system will expand the state’s access to additional sources of natural gas throughout the U.S. This will help reduce the state’s reliance on offshore sources and lessen its vulnerability to fuel supply interruptions that can occur in the Gulf of Mexico region during severe tropical weather.
“Like a highway interchange connects intersecting roads, the new system’s Central Florida Hub will link the state’s major natural gas transportation infrastructure. This will effectively increase our state’s energy security and reliability by introducing important flexibility in the event that the supply of one of the existing pipelines is interrupted,” Silagy said.
Permitting is underway for both projects, and construction is expected to begin in 2016 in order for operations to commence in 2017. In Florida, the projects will create an estimated 8,600 direct and indirect jobs during construction and generate more than $1.1 billion in new tax revenue for local schools and governments over 60 years.