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Florida gas-fired power plant latest move away from fuel oil


The start-up last week of Florida Power & Light's Cape Canaveralcombined-cycle, natural gas-fired power plant, replacing an older fuel oilpowered plant, marks the latest move away from domestic petroleum powerdemand in the state.

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It is a trend that will continue, with FP&L set to replace two more fueloil-fired plants with gas units over the next two years.

The 1,200-MWh Cape Canaveral project, which started operations on April24, replaced an older dual fuel plant that had used about 60% fuel oil and40% gas, FP&L spokesman Neil Nissan said Monday.

The move is part of FP&L's 10-year site plan for upgrading andmaintaining its power grid and generation capabilities.

With the completion of the Cape Canaveral project, FP&L has alreadymoved on to replacing its Riviera Beach dual-fired generator with a gas-firedplant, which is due to be operational in 2014.

FP&L also plans to replace its Port Everglades dual fuel unit with aplant fired solely by gas by 2016.

The new units will not completely abandon liquid fuels, as they willkeep some on hand for emergency gas supply constraints. The new units,however, will rely on ultra low sulfur diesel rather than fuel oil for thoseemergency supplies, Nissan said.

The new plants are the most recent developments in a decade-long shiftaway from fuel oil, and liquid petroleum fuel in general, and towards gas bythe Florida generation market.

FP&L estimates it has cut its oil demand from 40 million barrels/year in2001 to less than 1 million barrels/year in 2012, FP&L spokesman EricHofmeyer said. FP&L does not break that transition down by years, he said.

And it is unlikely that trend will do anything but continue, marketsources say.

"The only way fuel oil has a chance to run in Florida is if natural gasis cut off," a fuel oil trader said, comparing the situation to recentinfrastructure changes in the Northeast which is also moving towards gas forheating and power generation.

"Then the problem becomes anyone having the specs you need when you needfuel oil," the trader said.

Despite that risk, there is not much interest in keeping some dual-firedgeneration on the grid in case of large scale gas constraints, Hofmeyer said.

Much of that is due to a well developed gas pipeline infrastructure andease of access to supply even in high demand times, when compared with theNortheast.

Over the last three years, the gas price at the Florida city-gates hasrisen no higher than $8.155/MMBtu during the summer cooling season or$17/MMBtu during the winter, according to Platts data, still well below theequivalent cost of fuel oil.

By comparison, winter demand in the Northeast in 2013 saw spot gasprices rise in excess of $30/MMBtu.

With the addition of the Cape Canaveral plant, gas now accounts for 73%of FP&L's fuel mixture for power, Nissan said, while fuel oil accounts forless than 1% of it.

The bulk of the rest of FP&L's power comes from nuclear --21% -- thencoal and a small amount of solar power.

While that mix will continue to shift, the move away from oil looks tobe flattening out in the near term. After the Port Everglades project iscompleted in 2016, FP&L will moving on to focus on its nuclear plants.

FP&L will still have five dual fuel oil/gas plants in use on its system,but has no plans to renovate them, according to its current site report,which was released in early April.

The next FP&L site report, which will cover the 2014-2016 cycle, will notbe out until April 2014.

--Joshua Starnes,
--Edited by Keiron Greenhalgh,