Chesapeake Utilities unit plans $1.2 billion Florida gas pipelineAnalysis

Chesapeake Utilities is putting an estimated $1.2 billion into a new natural gas pipeline for south Florida. The company and its subsidiary, Peninsula Pipeline Company, announced the Florida Energy Pathway, a 24-inch intrastate natural gas pipeline that would run from Palm Beach County to Miami-Dade County. Firm commitments from multiple investment grade shippers already total nearly 250,000 dekatherms a day, anchoring the project.

What the pipeline is for

Peninsula Pipeline will develop, build and operate the line. The company says the project is meant to expand natural gas transportation capacity to address regional supply constraints, improve system reliability and extend gas infrastructure to homes and businesses in south Florida. Upstream capacity for the project will come from Florida Gas Transmission, tied to that company's Phase IX expansion. Peninsula Pipeline is still taking binding commitments from additional shippers for firm transportation service.

Cost, ownership and timing

Total project investment is estimated at approximately $1.2 billion, a figure the company says is pending finalization of design and development activities. Chesapeake Utilities is evaluating financing options and intends to partner with one or more third parties that would invest in and own up to 49% of the total project. The company anticipates Florida Energy Pathway will be in service in 2030, subject to final commissioning.

The company's case

Jeff Householder, Chesapeake Utilities' chair of the board, president and chief executive officer, tied the project to Florida's population growth. He said the state's growth has produced "significant energy supply constraints" in south Florida, a gap he said infrastructure expansions like Florida Energy Pathway are meant to help close. Householder also linked the project to the company's acquisition of Florida City Gas, calling Florida Energy Pathway a long-term, regulated growth opportunity that fits the company's natural gas transportation business and its expanded presence in south Florida.