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Low flows on Sabal Trail gas line signal minimal pain in case of short shutdown

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Low flows on Sabal Trail gas line signal minimal pain in case of short shutdown

Natural gas flows on the eventual 1.1-Bcf/d Sabal Trail pipeline have been lean in recent months, indicating the Florida natural gas market should be able to weather a brief interruption in service that could occur if a federal appeals court strips the authorizations that keep the pipeline and the greater Southeast Market Pipelines project in service.

Gas flows at receipt points and delivery points on Sabal Trail hit bottom in November 2017, January and February, according to SNL Energy pipeline data. Flows picked up at other times, with occasional spikes, including deliveries up around 400,000 Dth/d over several days in November 2017 and January. Flows were generally low before the winter, in the months after the first phases of the Southeast Market Pipelines project went into service in the summer of 2017.

A spokesman for a power generation customer said in December 2017 email that it was not using the pipeline much because mild weather had reduced electricity demand, but he said use would pick up when demand increases.

The U.S. Court of Appeals for the D.C. Circuit is considering whether to cancel the federal approvals for the project and make effective an August 2017 decision to vacate the authorizations on the grounds of an incomplete environmental review. Such a mandate could shut down the pipeline system until the Federal Energy Regulatory Commission issues new Natural Gas Act certificates, and would be a victory for pipeline opponents who have fought FERC approvals of new gas infrastructure.

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In their arguments in the D.C. Circuit, the pipeline's backers said canceled authorizations would cause a disruption in service to the pipeline customers, which include NextEra Energy Inc.'s Florida Power & Light Co. with 400,000 Dth/d of transportation capacity and which should soon include Duke Energy Corp.'s Duke Energy Florida LLC for 300,000 Dth/d. Duke Energy Florida is an anchor shipper but did not appear on the index of customers for Sabal Trail. Sabal Trail Transmission LLC is a joint venture of Enbridge Inc., NextEra and Duke Energy.

Pipeline opponents, including the Sierra Club, have insisted the court's mandate would not disrupt service.

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The effect of cancelling the authorizations on pipeline and customers would likely depend on how long the pipeline was without the authorization. ClearView Energy Partners LLC has observed that a stop could be as short as nine days before the new certificates are ready.

"If loss of authorization is very short lived and weather is benign during that interval, then the potential adverse impact can logically be expected to be less," the firm's managing director of research, Christine Tezak, said in a Feb. 20 email.

Even so, "our expectation is that a full stop, even if very short, would be a significant moral victory for pipeline opponents, even if injury to customers arising from a cold snap in [Florida] is avoided due to benevolent weather," Tezak wrote. "Even a short lapse of authorization would be a caution to the regulator going forward to remain diligent on reviews."

FERC's batting average at the D.C. Circuit on its certificates is good notwithstanding this case involving Sabal Trail and the greater Southeast Market Pipelines project. "Therefore, we would not consider a short lapse on the authorization in this case to mean that similar halts would be commonplace going forward," Tezak said. "We have observed FERC's reviews become incrementally robust over the last couple of years, and have held the opinion for some time that a deregulatory push under the Trump Administration would not include FERC becoming dramatically less so given the potential legal risk involved."

FERC approved the $3.2 billion Sabal Trail pipeline and its sister projects, the $459.8 million Hillabee expansion of the Transcontinental Gas Pipe Line Co. LLC system and the $537.3 million Florida Southeast Connection of NextEra, in February 2016. The first stages of these components of the Southeast Market Pipelines project went into service in July 2017. Sabal Trail runs more than 500 miles from Alabama to central Florida.

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