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Why Store Natural Gas?
Natural gas is the cleanest burning fossil fuel. It is used directly by consumers to heat their homes and cook their food and also used by utility companies to generate electricity. Demand for natural gas is growing rapidly throughout the country and the world.
Demand for natural gas is also rapidly increasing in Florida. In 2004, approximately 30% of Florida's electricity was generated through the use of natural gas. The Florida Public Service Commission anticipates that over 44% of the state's electricity will be powered by natural gas in 2014. However, Florida's only current source of natural gas comes from two existing underground pipelines which bring gas from Gulf Coast states to Florida. The capacity from these two pipelines is fully subscribed and will be fully utilized during peak periods by 2011.
Because of the growth in demand, gas supply reliability is also a very important consideration for Florida. During the 2004-2005 and 2005-2006 hurricane seasons, interruptions to gas production seriously threatened supply coming to Florida. Gas storage will also provide an important back-up fuel source for Florida should fuel supply be interrupted by a hurricane or other unexpected curtailment.
Natural gas prices have become increasingly volatile in recent years. Short-term supply interruptions due to weather or other impacts and seasonal increases in demand due to summer cooling/winter heating needs across the country can cause prices to spike.
All of Florida's natural gas is imported from other states via underground pipelines. Florida's geology is unsuitable for in-ground gas storage, so the state has previously had to look to neighboring states for their storage needs. However, the major population centers in central and south Florida are far removed from these resources.
Currently, Florida power plants burn more than two billion gallons of distillates and residual fuel oils each year. Much of this is consumed during the peak summer season when the natural gas pipelines are full and the negative effects of the additional emissions on air quality is greatest. By providing a way for the state's power providers to utilize additional cleaner-burning natural gas during peak periods, natural gas storage in Florida can help improve air quality. For instance, during the peak summer season in Florida, FGS gas storage capacity would provide enough natural gas to replace the burning of between 57 and 114 million gallons of fuel oil. In turn, this shift to cleaner-burning natural gas would avoid adding the following range of emissions each year: 188,000 -376,000 tons of carbon dioxide (CO2), 37-74 tons of sulfuric acid mist (SAM), 50-100 tons of particulate matter (PM), 175-350 tons of sulfur dioxide (SO2), 76-152 tons of carbon monoxide (CO) and 81-162 tons of nitrogen oxides (NOx). These numbers are conservative because they are compared to the cleanest burning oil generation (#2 distillate, 0.05% sulfur in a Frame 7 gas turbine). Oil burned in smaller, older units that use residual fuel oils would raise the amount of emissions avoided. These older units are currently used throughout Florida to meet peak demands. This environmental benefit is good for all Floridians.
Without question, Florida needs the capability to store natural gas in Florida near its consumers to provide the highest level of reliability.
Natural gas peak-shaving plants, like FGS, are also more economical to build than new, larger and longer pipelines. According to AGL Resources, above-ground storage construction is more than 430% less expensive than pipeline expansion construction to meet peak-day demands ( http://www.aglresources.com/about/LNG.aspx ).
Power and gas companies that choose to subscribe to the FGS storage service will deliver natural gas to the FGS facility during off-peak periods utilizing their capacity in the existing pipelines. Their gas will be refrigerated and stored in a specially designed tank at normal atmospheric pressure for their later use. When those companies need the gas, such as during peak summer days or during service interruptions, the process will be reversed and the gas will be returned to them through the pipeline grid. Power and gas companies can also use gas stored at off-peak prices to avoid price spikes when winter storms in the north cause all natural gas prices to rise.
Above-ground storage facilities offer several advantages over alternative in-ground storage options, such as in depleted reservoirs, aquifers and salt caverns. Florida's geology isn't suited to in-ground storage. Above-ground storage allows the stored gas supply to be constructed near where the customers are located, a great benefit in case of potential supply curtailment such as hurricanes.
The location of the FGS facility in an industrial area near Indiantown in Martin County is an ideal site. Both of Florida's natural gas pipelines are nearby and there are several other large industrial facilities next door. Gas can be delivered to and from the facility via underground pipeline less than 4 miles from the site. The size and location of the site also provide a greenbelt buffer for the gas storage facility. For more than 12 years, the site has been part of a Superfund clean-up remediation directed by the Federal Environmental Protection Agency (EPA). The site is still in remediation but has been available for restricted re-use since 2004. Because of EPA land-use restrictions for superfund sites, only certain types of enterprises can locate on this land. And, the companies must agree to accept the EPA restrictions going forward. Information from the Environmental Protection Agency about the Florida Steel site can be found at
http://www.epa.gov/region4/waste/npl/nplfls/flastlfl.htm.
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