The new line will run 465 miles (750 kilometers) from Alabama to a hub in central Florida, and carry as much as 1 billion cubic feet a day of gas, NextEra’s regulated utility, Florida Power & Light Co., said today in a statement. As winner of the contract, Houston-based Spectra will operate the pipeline and invest $2 billion while NextEra funds the remainder, it said.
NextEra, based in Juno Beach, Florida, will spend $550 million to build a separate pipeline from the new hub to its generating plant in Indiantown, Florida.
The project will be the third pipeline connecting Florida to new sources of gas around the country, including shale fields in Texas and the Northeast. FPL will be a major customer for the project, which also will sell capacity to other users. Florida consumes more natural gas for power generation than any U.S. state except Texas, and has virtually no production of its own.
“Natural gas is vital to the reliability and affordability of electricity in our state,” FPL President Eric Silagy said in the statement.
NextEra has been focused on driving earnings (NEE:US) through infrastructure investments as tepid demand has damped sales at Florida Power & Light. The company said in March that it may invest as much as $23 billion though 2016, including its new pipeline project. FPL, the state’s biggest utility, is upgrading gas generators as it seeks to make its fleet more efficient and prepare for a rebound in economic growth.
Spectra, the third-largest pipeline operator in the U.S. by market value, operates 22,000 miles of gas and crude oil pipelines in the U.S. and Canada. The Florida project is part of $25 billion Chief Executive Officer Greg Ebel plans to spend through the end of the decade to expand the company’s assets, according to a separate Spectra statement today.
The company is completing an $800 million connection from New Jersey to New York City. Ebel said Spectra was outbid earlier this year by Calgary-based TransCanada Corp. (TRP) on a pipeline to connect natural gas fields in Canada to a proposed export terminal in British Columbia.
The Florida pipeline must be approved by Florida regulators and the U.S. Federal Energy Regulatory Commission. Construction is scheduled to start in 2016, and the line could be in service by May 2017, according to NextEra’s statement. Spectra and NextEra have formed a joint venture called Sabal Trail Transmission LLC for the project.
Florida is served by two other interstate gas pipelines, both of which are nearing full capacity. Florida Gas Transmission has a capacity of 3.1 billion cubic feet a day, and Gulfstream has a capacity of 1.29 billion cubic feet a day. Spectra co-owns the Gulfstream line with Williams Cos.
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