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Today's IssueAlert Sponsors:=20 <http://www.energyventurefair.com/<; We are seeking 75 of the most promising energy-based technology and service= companies to present at Energy Venture Fair II, January 29 & 30, 2002, Hou= ston, TX-the follow-up to the explosively successful Energy Venture Fair I = held in Boston in June. If you are a Senior Executive from one of these com= panies, and are interested in having a platform to present your vision and = business plans before a national audience of investors, please contact Nann= ette Mooney at (818) 888-4445, Ext. 11, for more information, or via email = at nannettem@energyventurefair.com <mailto:nannettem@energyventurefair.com<= . APPLY TODAY - SPACE IS LIMITED.=20 <http://www.energyventurefair.com<;=20 <http://www.nuclear-gen.com< Infocast's Building New Nuclear Power Plants Conference brings together the= leading operators, equipment manufacturers, regulators, financial analysts= , and builders of nuclear power plants to one place to discuss the road for= ward for building new nuclear power. Contact Infocast at (818) 888-4444 for= more information or go to www.nuclear-gen.com <http://www.nuclear-gen.com<= =20 <http://secure.scientech.com/rci/wsimages/scientech_logo_small.jpg< <http://secure.scientech.com/rci/wsimages/IssueAlert_Logo_188.jpg< October 3, 2001=20 Williams and Duke Commence Construction of Gulfstream Project=20 By Will McNamara Director, Electric Industry Analysis=20 <http://secure.scientech.com/rci/wsimages/will100border_copy.jpg< [News item from Business Wire] Gulfstream National Gas System announced tod= ay that it has received Federal Energy Regulatory Commission (FERC) approva= l to commence mainline pipeline construction in Florida. With this approval= , Gulfstream now has all the major segments of its 753-mile pipeline projec= t under construction and on schedule to deliver natural gas in June 2002.= =20 Analysis: The Gulfstream Natural Gas System, which is by far the largest pi= peline project in the Southeast, has been designed specifically to deliver = natural gas into the Florida wholesale market. When finished, the project r= eportedly will be the largest natural-gas pipeline in the Gulf of Mexico, w= ith capacity to transport approximately 1.1 billion cubic feet of natural g= as per day, and the first new transportation system to serve Florida in mor= e than 40 years. Williams (NYSE: WMB) and Duke Energy (NYSE: DUK) jointly o= wn the pipeline, having purchased it from Coastal Corp. last year, a sale t= hat was made possible due to regulatory requirements surrounding Coastal's = merger with El Paso Corp. Along with projects still being led by El Paso Co= rp. (NYSE: EPG), the Gulfstream project highlights the continuing emphasis = on pipeline construction, which by some accounts is experiencing the larges= t wave of expansion since the early 1960s.=20 Williams and Duke have provided a current status report regarding construct= ion of the pipeline, including notice that more than 200 of the 431 miles o= f offshore pipeline have been laid in the Gulf of Mexico. Gulfstream also h= as already laid pipe in parts of Florida and Alabama, some of the more sens= itive regions along the pipeline's path.=20 Like other pipeline developments, the Gulfstream project, the construction = for which began on June 1, 2001, is being driven by several factors, includ= ing demand (which for the most part remains strong), the prominence of natu= ral gas as the fuel source for new power plants and a presidential administ= ration that is supportive of production. What is perhaps most interesting a= bout the boom in pipeline construction is that many of the same companies t= hat own or control natural-gas supplies are also quickly acquiring or partn= ering with other firms that specialize in pipeline construction.=20 For background, subsidiaries of Duke Energy and Williams announced their in= tent to jointly purchase Coastal Corp.'s 100-percent interest in the Gulfst= ream Natural Gas System project in November 2000. The project was originall= y sponsored by a subsidiary of Coastal Corp., a $16 billion Houston-based e= nergy holding company with operations in natural-gas production, distributi= on and marketing. However, due to regulatory mandates related to Coastal Co= rp.'s merger with El Paso Energy Corp., Coastal Corp. was forced by the Fed= eral Trade Commission to divest the project. As a result, Duke Energy and W= illiams found a good window of opportunity to purchase the pipeline project= and its valuable inroad to the Florida market.=20 Approximately 400 miles of the route, which originates in Mobile, Ala., cro= sses the Gulf of Mexico and will be located in federal offshore waters. Gul= fstream offers 1.2 billion cubic feet of natural-gas capacity per day, and = is designed to primarily serve Florida utilities and power-generation facil= ities that plan on using high-efficiency natural-gas turbines. Already, the= project has precedent agreements with 10 large Florida utilities and power= generation facilities.=20 Duke and Williams have agreed to jointly manage the operation and developme= nt of the Gulfstream project. It's not difficult to assess why Duke and Wil= liams would be willing to co-own the project. The two companies, which have= historically had a collaborative relationship, already own significant amo= unts of interstate natural-gas pipeline capacity. Between its two subsidiar= ies involved in natural-gas production-Duke Energy Field Services and Duke = Energy Gas Transmission-Duke Energy owns and operates about 57,000 miles of= pipeline and 12,000 interstate miles of capacity. Williams' five interstat= e natural-gas pipelines reportedly deliver about 16 percent of the natural = gas consumed in the United States. The company's vast 27,300-mile pipeline = network stretches from coast to coast and from Mexico to Canada, serving mo= re than 48 million residential, commercial and industrial natural-gas users= . In fact, the two companies already were planning the Buccaneer Gas Pipeli= ne project in Florida, a 674-mile pipeline that would have followed a simil= ar route as the Gulfstream project will follow. Duke and Williams are no lo= nger planning the Buccaneer project now that they have acquired the Gulfstr= eam project. The addition of Gulfstream should benefit both companies and o= ffer a prime position for them to expand their independent operations in Fl= orida.=20 The CEO of Williams' gas pipeline group stated that the Florida market woul= d support only one new pipeline coming into the state. By joining together,= Williams and Duke can both capitalize on the high-growth state as it event= ually becomes competitive. First among the priorities for the project is to= ensure adequate pipeline capacity by June 2002, and meeting the projected = 10,000-MW electric generation growth that is expected in the state of Flori= da by 2007.=20 Duke Energy also confirmed that the purchase of the Gulfstream project acce= lerates its own entry into Florida. In fact, Richard Priory, Duke's CEO, co= nceded at a conference last year that Duke's future success would result fr= om its natural-gas operations. Specifically, Duke has been focused on merch= ant plant and natural-gas pipeline construction for some time. As of this s= ummer, Duke was rated third in announced merchant plants (behind Calpine an= d Panda), and has made no bones about the fact that its strategy is centere= d around building additional merchant plants and acquiring natural-gas pipe= lines. Thus, the acquisition of Gulfstream is a perfectly appropriate move = for the company to make.=20 Most projections place natural gas as the ongoing fuel of choice for new ge= neration as the demand for natural gas is expected to increase from 23 tril= lion to 30 trillion cubic feet per year by 2010. In addition, coal and nucl= ear generation came under environmental and public scrutiny over the last t= wo decades, at a time when natural-gas prices were comparatively low. All o= f these factors have created a strong market for natural-gas generation.=20 Duke has had a rather difficult time penetrating the Florida market, so thi= s pipeline could facilitate easier expansion in the state. About a year ago= , the Florida Public Service Commission had approved the construction of a = Duke merchant plant in New Smyrna Beach. However, the state's three IOUs ap= pealed the decision to the Florida Supreme Court, arguing that merchant pla= nts were not allowed under state law. The Florida Supreme Court overturned = the decision of the state PSC, blocking Duke's entry into the state. Conseq= uently, Duke is wisely using the acquisition of the Gulfstream project as a= nother way to get into the Florida market (and one that is potentially more= profitable).=20 Along with Duke and Williams, El Paso Energy Corp. also is focused on build= ing and acquiring new pipeline capacity. The company is the parent of subsi= diaries El Paso Natural Gas, a regulated company that operates pipelines, a= nd El Paso Merchant Energy, an unregulated company that markets natural gas= . El Paso Natural Gas owns and manages the Western Division pipeline, which= includes 14,604 miles of interstate pipeline, serving markets in Californi= a, the southwestern United States and throughout the Rocky Mountains. In fa= ct, El Paso owns and operates the largest natural-gas pipeline in North Ame= rica, totaling more than 58,000 miles of pipeline reaching all the major gr= owth areas in this country.=20 An archive list of previous IssueAlerts is available at www.scientech.com <http://secure.scientech.com/issuealert/<;=20 We encourage our readers to contact us with their comments. We look forward= to hearing from you. Nancy Spring <mailto:nspring@scientech.com< Reach thousands of utility analysts and decision makers every day. Your com= pany can schedule a sponsorship of IssueAlert by contacting Jane Pelz <mai= lto:jpelz@scientech.com<. Advertising opportunities are also available on o= ur Website.=20 SCIENTECH is pleased to provide you with your free, daily IssueAlert. Let u= s know if we can help you with in-depth analyses or any other SCIENTECH inf= ormation products. If you would like to refer a colleague to receive our fr= ee, daily IssueAlerts, please reply to this e-mail and include their full n= ame and e-mail address or register directly on our site.=20 If you no longer wish to receive this daily e-mail, and you are currently a= registered subscriber to IssueAlert via SCIENTECH's website, please visit = <http://secure.scientech.com/account/<; to unsubscribe. Otherwise, please se= nd an e-mail to to IssueAlert <mailto:IssueAlert@scientech.com<, with "Dele= te IA Subscription" in the subject line.=20 SCIENTECH's IssueAlerts(SM) are compiled based on the independent analysis = of SCIENTECH consultants. The opinions expressed in SCIENTECH's IssueAlerts= are not intended to predict financial performance of companies discussed, = or to be the basis for investment decisions of any kind. SCIENTECH's sole p= urpose in publishing its IssueAlerts is to offer an independent perspective= regarding the key events occurring in the energy industry, based on its lo= ng-standing reputation as an expert on energy issues.=20 Copyright 2001. SCIENTECH, Inc. All rights reserved. <http://infostore.consultrci.com/spacerdot.gif?IssueAlert=3D10/3/2001<;
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