AES to Call for Florida-Bahamas Pipeline Bids mid-May

US energy company AES plans to call for bids by mid-May for a US$160mn contract to build an 84km natural gas pipeline from the Bahamas to Florida, project director Aaron Samsom told BNamericas.

The 24-inch pipeline will have a capacity of 850 million cubic feet a day (mcf/d), Samson said. AES is scheduled to complete the environmental reviews and financing by end-2003, with construction starting in early 2004. Operations would then start late 2005 or early 2006, he added.

The pipeline is part of a US$650mn project that includes the construction of a liquefied natural gas (LNG) receiving terminal in the Bahamas' Ocean Cay. AES has awarded a US$300mn turnkey contract for the terminal to US company Chicago Bridge & Iron (NYSE: CBI).

The terminal is still waiting for environmental permission from the Bahamas' government, Samson said, adding that the terminal is scheduled to start operations at the same time as the pipeline in late 2005.

AES subsidiaries AES Ocean Express and AES Ocean LNG are managing the construction of the respective pipeline and receiving terminal projects. AES received permission from the United States' Federal Energy Regulatory Commission (FERC) in early April to build the part of the pipeline under US jurisdiction, and is waiting for permission from Bahamian authorities for the rest of the pipeline. "We have almost completed the agreement with the Bahamian government, which is currently reviewing our environmental impact study (EIS)," Samsom said, adding that he expects to receive final approval "shortly."

The growing Florida market that the pipeline would serve is "very big, very high credit and we have access to the existing pipeline system which is all we need," Samson said, adding that AES is currently negotiating "a couple" of supply contracts in Florida. AES expects to supply about a third of Florida's gas demand, which is expected to grow by 2.4 billion cubic feet a day in the next 10 years. "Florida has two pipeline systems in place, one is full and can't expand and the other one is not full but can't serve the south Florida market so there is definitely need there," Samsom said.

AES is not the only company looking to supply Florida's rising gas demand. Fellow US oil & gas company El Paso and Belgium's Tractebel are also in the race to construct LNG receiving terminals and pipelines from the Bahamas to Florida. But according to Samsom, AES is leading the pack. "El Paso has not even made a filing with the federal government yet so they are substantially behind us, and [Tractebel's] Calypso project is also behind us so I think we will be the first one built," Samsom said.

The Bahamian government has previously said that it will only give permission to two of the three proposed pipeline projects, and Florida's gas demand is not growing fast enough to accommodate three new pipelines anyway, Samsom said. "I think that the first guy done has a huge advantage and I think we will be done substantially in front of the other two projects," he added.

AES Ocean LNG's receiving terminal will be at least 50% supplied by LNG shipped from Africa. "Algeria and Nigeria are big exporters, Egypt has two projects under construction, and Angola has big plans, so there is a lot of LNG coming out of Africa," Samsom said. "If they were ready to commit to 100% of the supply I would let them have the contract," he said, without divulging the name of the company or the country that will supply the LNG. But if the company in question does not pick up the remaining supply contracts, AES Ocean LNG could also sign contracts with nearby Trinidad's Atlantic LNG project. AES is not considering any other LNG projects in Central America or the Caribbean at the moment. "We have looked at Mexico but it looks a little crowded," Samsom said.

About Business News Americas: Business News Americas is a multilingual news and business information service that covers the most important original stories in 11 different business sectors throughout Latin America everyday. Visit BNamericas to access our real-time news reports, 7-year archive, Fact File company database, and latest research reports.

Click here for a Free two week trial to our Latin America Oil & Gas information service.