Dive Brief:
- Florida Power & Light (FPL) is hoping to partner with gas production company PetroQuest Energy over 38 prospective gas wells to be built in Oklahoma, according to new filings with the state's Public Service Commission.
- FPL will have to buy out its affiliate company USG Properties Woodford at a cost of $68 million. It was also invest $120 million in the proposed wells over the next three decades.
- The wells would be operated and maintained by PetroQuest, while FPL would be guaranteed a certain portion of the gas produced to fuel its natural gas plants.
Dive Insight:
The partnership would save FPL about $107 million on natural gas expenditure, which in the grand scheme of things, isn't very much, said Sarah Gatewood, spokeswoman for FPL. Part of the problem with natural gas generation is that prices for gas can fluctuate wildly, making it at times a prohibitively expensive resource. "The goal is get natural gas cost as low and as stable as possible, so we aren't subject to market conditions as much," she said.
In the last five years FPL has retired three of its coal-fired power stations, replacing them with natural gas plants instead. In total, the utility buys about 2 billion cubic feet of natural gas per day for its plants. It expects to spend $3.2 billion this year buying fuel Investing in production of the resource should help guarantee a supply at stabilized costs for the next thirty years or so. However, environmentalists point out that the volatile price of natural gas makes it perhaps a less attractive option than other types of clean energy investment.
"I understand the need to save money on their supply of natural gas," said Susan Glickman, regional director of the Southern Alliance for Clean Energy. "But we need to look at the underlying drivers. To the extent this increases their incentive to build more plants, that's not good for consumers."
