Federal Regulators OK Florida Natural Gas Pipeline Project

The Federal Energy Regulatory Commission on Thursday approved Florida Gas Transmission Company's $2.45 billion Phase VIII natural gas pipeline expansion project, which will transport gas to power plants throughout the Sunshine State.

The project will add more than 483 miles of pipeline and install one new compressor station, creating 820,000 million cubic feet of gas transportation capacity from Alabama to Florida. The U.S. uses about 60 billion cubic of gas a day.

Florida Gas Transmission expects the first phase of the project to begin service by July 1, 2010, while the second phase is scheduled to start by April 1, 2011. As part of the project, the company will acquire the 22.7-mile Martin Lateral, a pipeline segment owned by FPL Group's (FPL) Florida Power & Light Company.

The project will serve gas-fired power plants owned by Progress Energy Inc.'s (PGN) Florida utility, Teco Energy's (TE) Tampa Electric, Seminole Electric Cooperative Inc., the Orlando Utilities Commission and the City of Tallahassee, Fla. The expansion project doesn't require state approval because interstate pipelines are regulated by FERC, Florida Gas Transmission spokesman John Barnett said.

Florida Gas Transmission is 50% owned by El Paso Corp. (EP) and 50% owned by Southern Union Company (SUG). The Florida Gas Transmission system includes 5,000 miles of pipeline stretching from Texas to south Florida.

FERC's approval of the Florida Gas Transmission project comes weeks after Florida regulators denied FPL's proposal to build a new underground gas pipeline in the state, arguing that the project wasn't the most cost-effective and reliable way to bring more gas to Florida.

-By Christine Buurma, Dow Jones Newswires; 212-416-2143; [e-mail]