Sabal Trail pipeline started posting pipeline receipts from Transco on June 14, 2017 (Sabal Trail service started on June 6 however the Sabal Trail EBB has incomplete history June 6-11) and is now taking about 250 MMcf/d of natural gas from Transco in Alabama and delivering volumes to end users in Central Florida. The problem: Sabal Trail adds more pipeline capacity, but not incremental demand.
As shown in the map below the Florida natural gas market is mostly now served by Florida Gas Transmission (FGT), Gulfstream and now Sabal Trail. FGT and Gulfstream have historically been served by deliveries from Transco flowing as much as 750 MMcf/d on June 1, 2017. As Sabal Trail has ramped up service, Transco deliveries have fallen off to just over 500 MMcf/d. So roughly 250 MMcf/d of Transco volumes that once went to FGT and Gulfstream off the Transco Mobile Bay Lateral in Alabama are now being delivered to the Transco-Sabal Trail interconnect in Alabama. However, other pipelines are being impacted as well, as shown in the bottom right graph below, FGT receipts in Alabama from Destin, Gulf South and Southeast Supply Header (SESH) are also off in June. This all as Sabal has started to take 0.25 Bcf/d of volume against 1 Bcf/d of capacity.
New capacity to demand driven markets is generally good for end users of natural gas which typically see lower priced natural gas as a result of additional supply and diversity of supply. The challenge is natural gas in Florida faces growing competition from residential, commercial and utility scale solar resources as well as power forecasts that are revising lower despite a growing population and customer counts - as shown below.
In addition, according to FPL's 10 Year Power Plant Site Plan issued in 2017, solar PV is only set to steal more market share from gas. According to the plan, in FPL's territory in 2016 solar tripled from 110 MW to 333 MW by year end 2016. FPL also added a significant amount of new solar generation to its forecasted supply of generation capacity. FPL states it plans to add 2,086 MW of PV solar through 2023 starting in 2017 with adding 298 MW per year - which would represent a double of 2016 year-end levels.
Solar PVs impact to natural gas demand in Florida may already be showing up in the pipeline flow data as shown below. Florida natural gas demand peaks in the summer driven by power burn for cooling demand. Summer to date 2017, deliveries off FGT and Gulfstream, and including the addition of Sabal Trail last week, show that total natural gas demand in Florida is off 4% or 162 MMcf/d. Meanwhile the peak levels of 4.5 Bcf/d seen in summer 2016 have not been reached in summer 2017.
As Sabal Trail ramps up to larger volumes, will FGT and Gulfstream lose more volume to Sabal? Will Florida power demand finally kick in, or is solar PV positioned to put more pain into E&Ps looking for increased natural gas demand in the Florida markets?
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