Tractebel to Contract Bahamas LNG Work by 1Q04

Belgian energy company Tractebel expects to decide how to manage its US$550mn-600mn liquefied natural gas (LNG) project in the Bahamas by the end of this year, and award contracts by 1Q04, project director Jim Ebeling told BNamericas.

The project includes an LNG receiving terminal in Grand Cayman Island in the Bahamas, marine facilities, and a 90-mile pipeline to Florida's southern coast, including a five-mile onshore segment. Construction of the LNG terminal will take 32-36 months with operations starting up in early 2007, Ebeling said, adding that Tractebel's gas engineering subsidiary will provide assistance with front end design studies.

Tractebel expects to receive all permits from the US Federal Energy Regulatory Commission (FERC) and the Bahamian government by 4Q03, Ebeling said. FERC has given preliminary approval to Tractebel for the 40-mile US section of the pipeline, called Calypso, and is now waiting for completion of an environmental review. FERC said it considers the potential benefits of Tractebel's project would outweigh any potential adverse effects, "and that the proposal is required by the public convenience and necessity." Market estimates indicate Florida will require more than 9,600MW of additional generating capacity by 2007, requiring some 2 billion cubic feet a day (bcf/d) of natural gas. Tractebel's Calypso pipeline will supply 832mcf/d.

The project was bought from bankrupt US company Enron in May 2001. Tractebel will seek various supply sources to prevent any disruptions to supplies, Ebeling said. Algeria, Nigeria and Trinidad are all possible LNG suppliers.

In April, FERC approved a similar project proposed by US-based AES, which is also now awaiting permission from Bahamian authorities. AES plans to start operations in early 2006, one year ahead of Tractebel, but that does not raise any concerns, Ebeling said. "My schedule is based on what we believe to be an aggressive but achievable schedule based on our knowledge in-house and our expectations for permits," Ebeling said, adding that AES only received their preliminary determination from FERC on April 9. Tractebel is also ahead of AES in the Florida permit process, Ebeling said, adding that Tractebel has been "very diligent" in restarting Enron's original permitting process begun in 2001, while AES only made its application to Florida's state government in December 2002. US oil & gas company El Paso has proposed a similar project linking Florida and the Bahamas, but 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.

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