It is seeking potential buyers for the Bahamas-based portion of its project, the Bahama Journal has learnt.
Aaron Woods, spokesperson for El Paso, told the Journal recently that the company still proposes to build a 128-mile pipeline from Grand Bahama to South Florida, but a buyer is needed as the company attempts to restructure its finances.
Trade and Industry Minister Leslie Miller said this development takes El Paso “out of the game” as far as government approval is concerned.
Last Thursday, the Houston-based oil company announced the start of an open season for bidding on its proposed Seafarer pipeline from High Rock to South Florida.
Mr. Woods explained that the company’s open season is a pre-requisite to submitting its project proposal to the U.S. Federal Energy Regulatory Commission (FERC).
He said that, “The open season allows shippers to have an equal opportunity to bid for capacity on any proposed pipeline project. Before we can submit a proposal to FERC, we have to demonstrate that there is market support for [our] project.”
According to Mr. Woods, LNG facilities are expensive to build and operate, and since the company is focusing on lowering its debt, it wishes to focus on operating LNG pipelines, which are more lucrative.
El Paso Oil has suffered significant financial losses in recent years. According to the company’s website, the oil conglomerate hopes that in restructuring its finances, it will be able to slash its $23.6 billion debt to $15 billion by 2005.
In addition to environmental lawsuits, the company incurred huge losses after paying out settlements stemming from charges that it manipulated energy prices on the stock exchange in order to boost it revenues, the International Herald Tribune has reported.
The company website has posted a plan to sell many of its natural gas reserves in the U.S, Canada, Hungary and Indonesia.
Financial regulatory institutions in the United States have urged companies like El Paso to cease the practice of price manipulation and other practices that unlawfully affect the energy market.
Environmental groups, meanwhile, continue to insist that LNG pipelines would threaten the environment.
These concerns continue to be raised even though in the U.S. legislation is in place to regulate and adjudicate matters associated with the building and operation of LNG facilities.
But there is a different story in The Bahamas as far as environmental laws are concerned.
Chairman of the Bahamas Environment Science and Technology Commission Keod Smith brought such legislative issues to the fore weeks ago, when he urged the government to move “very slowly” before making a decision regarding the projects.
He said that as the necessary legislation and policy framework are not in place here, it would be premature for the government to approve any of the proposals.
Some U.S. financial analysts have suggested that El Paso Oil will have a difficult time attempting to build new pipelines while it is trying to raise capital in order to lower its debt.
While the company has yet to apply to its own U.S. regulatory bodies for approval of its proposal, it has already submitted application to The Bahamas government for the same.
Minister Miller told the Journal, “I have spoken to my U.S. counterparts here and in fact they were taken aback that [our government] has received an application and an Environmental Impact Assessment (EIA) report when FERC had not received anything from El Paso as yet.”
Minister Miller spoke to the Bahama Journal from Washington where he was attending an LNG conference.
“El Paso [officials have] spoken to me several times over the past few months and they have communicated to us that they were trying to get partners,” he said. “Because of the financial situation El Paso finds itself in, my Ministry doubted that it was capable of finding the resources to fund its project to The Bahamas.”
Tractebel, another company that wishes to run an LNG pipeline from The Bahamas, recently submitted its EIA to the government and to executives of the Grand Bahama Port Authority for its proposed pipeline and LNG facility from Freeport to South Florida.
The AES Corporation is the third company vying for approval to operate LNG facilities in the Bahamas.
Minister Miller said that both companies are the strongest in terms of their financial capacity.
But Tractebel also has the support of the Grand Bahama Port Authority, which courted the would-be investors and has pledged to do “all in its power” to see the company get approval in The Bahamas.
By Sharon Williams, The Bahama Journal
