Although no official green light has been given to any of the three energy giants wanting to construct a liquefied natural gas (LNG) pipeline to The Bahamas, Virginia based AES Corp is confident that it would receive approval from The Bahamas government, so much so, that its Vice President of Investor Relations, Mr Scott Cunningham, told The Guardian Sunday that if rejected, the company intends to go back to the drawing board and “work through all of the issues.”
“If that [rejection] were to be the case, we would certainly want to go back to the government and work through and understand whatever occurrence(s) caused them to reject it [proposal], and find a way to address those concerns. We don’t anticipate rejection because we believe that we can work through all of the issues and lead the project to a position where it can be approved when the government is ready to do so,” said Mr Cunningham during an exclusive interview with The Guardian from Arlington, Virginia.
AES Corp wants to build a gas pipeline between Ocean Cay, Bimini, and Dania Beach, Florida. It proposes to construct a terminal to receive liquefied natural gas via ocean tankers, store the liquid gas, re-convert it to natural gas through warming and send it to the United States via pipeline.
Last week Tuesday, AES and Houston based Tractebel underwent one of the final hurdles of approval in the United States to construct an LNG pipeline, after being issued an Environmental Resource Permit (ERP). Last month, Florida Governor Jeb Bush decided that AES and Tractebel must wait for state approval before constructing an LNG pipeline. At the time Bush said that he was concerned about South Florida being a landing point for natural gas coming from the Caribbean to points across the United States, however, the Environmental Resource Permit (ERP) was eventually issued to both companies.
Mr Cunningham said the issuance of an ERP marked the last major approval needed in the United States. He mentioned however that additional “technical” approvals were required, but these procedures were not as significant and nail-biting as the ERP or the Final Environmental Impact Statement issued last December by the Federal Energy Regulatory Commission (FERC). He said that the most important approval however, would be the one issued by The Bahamas government.
Asked about the last “update” with Bahamian authorities, Mr Cunningham only responded that he would rather wait for the government of The Bahamas to speak for themselves regarding the status of the project. He also added the he did not know of any specific meeting dates and was responding to all questions posed by the government on a “regular basis.”
“We have technically met all of the requirements [for The Bahamas] and we certainly value the government giving full consideration to all the merits of the project and we look forward to their decision when they think it is appropriate to make a decision,” he said.
According to Mr Cunningham, AES understands the long wait of The Bahamas government to make a decision. He said that the decisions on both sides (U.S. and The Bahamas) are important and there must be a full and comfortable decision coming from both sides when it comes to a project of such magnitude. “I think we have made it clear to the government that we can mitigate any environmental concerns during construction and during operation, and we certainly believe the location of our terminal at Ocean Cay, a remote and uninhabited island, to be very appropriate. It has a very limited view and it is difficult to see from any of the tourism areas. It just seems to us that the location is ideal for something like this, but this is a decision the government has to make,” he said.
Mr Cunningham also highlighted that remoteness of the location was important. He explained that, as the gas is destined for South Florida, it would be impossible to identify an uninhabited location nine miles from the nearest population. The remote location at Ocean Cay, he said, was very attractive for AES and the Cay also allows access for deep-water ships.
Asked about some of the hazards of constructing an LNG pipeline to The Bahamas, Mr Cunningham said the company mainly wants to be careful about disrupting the seabed during the construction phase of the pipeline. He said that in an effort to ensure that this does not happen, they would construct the pipeline under coral reefs so that reefs would not be disturbed in “some” areas. The AES Investor Relation VP further informed that detection methods and monitoring systems would be put in place to identify a leak and have it quickly repaired. He added however, that LNG pipelines are designed to be very strong with firm connections, therefore there should be no leaks.
The last LNG pipeline was built by AES some two years ago in Boca Chica, Dominican Republic. Mr Cunningham said the company has recent experience with building LNG pipelines in the Caribbean, and this gives them a strong advantage over other vying companies. Mr Cunnigham said that if given approval, AES would begin construction before the end of the year and expects to begin LNG deliveries to Florida by late 2006. He concluded that in the meantime, the company anticipates signing “one on one” long term contracts for sales to electric or gas utility companies in South Florida once the project is approved. “We believe having an approved project would be very advantageous in assuring supplies of clean gas to South Florida,” he said.
Meanwhile, in addition to AES Corp and Tractebel, Texas El Paso is the third company vying to construct an LNG pipeline through The Bahamas, and all companies have so far submitted proposals to the Bahamas Environmental, Scientific and Technology Commission (BEST) for review. It was speculated however, that AES Corp would be first in line to receive Government approval if a green light is given to one of the three companies. AES was the first to submit its $4 million Environmental Impact Assessment (EIA) to BEST for review. Its review was completed last November and its documents have since been forwarded to the Cabinet. In the United States, AES was also the first to win FERC approval and was issued its Final Environmental Impact Statement last December. However, the EIA of the two remaining energy giants are still being reviewed by BEST, leaving AES as the only company that would be granted government approval at this time.
On the other hand, El Paso Corp, who seems to be lagging in the negotiation race, announced in a statement issued last week Wednesday that a Florida Power and Light (FPL) Group unit had won rights to the full capacity of a planned pipeline to ship natural gas from a liquefied-gas plant in The Bahamas to Florida. FPL Group Resources, a unit of the FPL Group, gained rights to 800 million cubic feet of daily capacity on the proposed Seafarer pipeline in bidding that ended January 19, the Houston-based El Paso said in a statement. The FPL Group needs the gas to help supply plants operated by its Florida Power & Light utility, the state’s largest, a company spokesman said. Seafarer is one of three pipeline projects under development to bring gas to Florida from re-gasification plants in The Bahamas to make up for an expected shortfall in U.S. production of the fuel as the economy rebounds.
Tamara McKenzie, The Nassau Guardian
