Electric utility Duke Energy bought a 7.5% ownership stake in the proposed Sabal Trail natural gas pipeline, the company said May 5. The $3 billion pipeline will transport natural gas through Alabama, Georgia and Florida.
Over the next seven years, Duke Energy's commercial power business unit will invest about $225 million in the underground pipeline, which is about 500 miles long. It will run from Tallapoosa County, Ala., to Osceola County, Fla. In the next three years, Duke will invest more than 90% of the $225 million, the company said.
Sabal Trail is scheduled to be in service in 2017, pending federal and other regulatory approvals.
Sabal Trail Transmission, a joint venture of the pipeline's owners – Spectra Energy, NextEra Energy Inc. and Duke Energy – seeks to secure those approvals by early 2016 and begin pipeline construction later that year.
Charlotte, N.C.-based Duke Energy acquired its ownership share from Spectra Energy, resulting in a pipeline ownership structure of Duke Energy (7.5%), NextEra Energy (33%) and Spectra Energy (59.5%).
The pipeline's largest customers will be two Florida electric utilities – Duke Energy Florida and Florida Power & Light Co. – which contracted to buy capacity for 25-year initial terms.
The pipeline will deliver about 1.1 billion cubic feet per day of natural gas to power plants, natural gas distribution companies, manufacturing plants and other industrial users in the Southeast.
Duke Energy Florida will use natural gas from the pipeline to fuel its new $1.5 billion power plant in Citrus County, Fla., scheduled to open in 2018.
Florida uses natural gas to generate 62% of its electricity, according to U.S. Energy Information Administration data.
Sabal Trail is Duke Energy's second interstate natural gas pipeline investment announced in the past eight months.
In September 2014, the company became a 40% owner of the proposed 550-mile Atlantic Coast Pipeline. The $4.5 billion pipeline is scheduled to be in service in late 2018. It will run through West Virginia, Virginia and North Carolina.
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