Feb. 7--CHIPLEY -- Florida Gas Transmission sent a letter to Nan Thompson in December 2007, telling her it had plans for her property.

Florida Gas Transmission (FGT) operates a 5,000-mile pipeline that pumps natural gas from Tivoli, a small community in southeast Texas, along the Gulf Coast to South Florida. The pipeline runs under Thompson's Red Deer Road property in Washington County on its trek across the Panhandle.

FGT was in the planning stages of its phase VIII expansion, a $2.4 billion project that will add 483 miles of pipe parallel to the current line. FGT wanted to dig on the south side of Thompson's land to install new pipe, but mobile homes for Thompson's daughter and motherin-law were in the way.

"They were hostile in the beginning, lots of threats," Thompson said. "We were probably more hostile to them. They tried to get onto the property by way of storming it. They met me and mother-in-law with my foot on the gate and my truck pulled up, real redneck-style."

Thompson and FGT were able to work out their differences; the new pipes will go on the north side of her property, away from her new two-story home and the trailers.

FGT has had to wrangle with tougher customers than Thompson and her mother-inlaw, though. The latest expansion comes after a legal struggle with Florida's biggest power company (and FGT's biggest customer), and accusations of backroom deals and favoritism involving a swanky Kentucky Derby party that brought attention to this littlecovered industry and the powers that dominate it.

Conquered Jaws

For something as potentially mind-numbingly boring a topic as a gas pipeline company, FGT has quite a colorful history, complete with a 1998 lightning strike that created a massive fireball and, as a result, altered the Jaws attraction at Universal Studios, and a temporary ownership by Enron (yes, that Enron).

The initial 2,700-mile pipeline was built for $172 million in 1959, according to a company profile on Harvard Business School's Web site. The 1959 pipeline could deliver 275 million cubic feet of gas per day in Florida, less than one-tenth of the line's capacity when phase VIII is done. (To put that amount in context, 1,000 cubic feet is roughly enough to last an average home four days.)

FGT doesn't pull gas from the ground; it just pumps it from gas producers along the Gulf Coast, allowing utilities such as Gulf Power, TECO Peoples Gas and Florida Power & Light to tap into the line. FGT doesn't have residential or business customers, just utilities and municipalities -- the city of Chipley is a customer -- and 75 percent of the gas flowing through the pipeline goes to creating energy, according to the FGT Web site.

FGT has had a few different owners since 1959, the most notable being Enron. Many FGT workers lost retirement savings in Enron's collapse, and the pipeline company was auctioned off as part of Enron's bankruptcy proceedings, according to a 2002 Palm Beach Post story that said FGT, which declined to provide financial data for this story, had revenue of $357.2 million in 2001, with net income of $81.9 million.

FGT, which is now co-owned by Southern Union Company and the El Paso Corporation, always has been the dominant supplier in Florida, and the state's dependence on its pipeline was highlighted in August 1998.

That's when a lightning strike ignited the pipes in Perry, about 45 miles southeast of Tallahassee. A fireball curled hundreds of feet into the air, according to newspaper reports, destroying six homes and curtailing gas service to everything south of Perry. Walt Disney World hotels went without hot water for several days, and the Jaws ride was flameless until service was restored.

FGT's chief competitor, Gulfstream Natural Gas, has only had a pipeline in service since 2002. Gulfstream's line spans the Gulf of Mexico from Mobile Bay, Ala., to Tampa Bay, and snakes into Central Florida.

"Before us, it was pretty much FGT, and they were it," Gulfstream spokesman Chris Stockton said. Gulfstream's pumping capacity, 1.26 billion cubic feet per day, is less than half the 3 billion cubic feet FGT will be able to pump when phase VIII is complete.

FGT holds 60 percent of the Florida natural gas market, according to the state Public Service Commission (PCS), but its market-hold was threatened last year by its biggest customer, Florida Power & Light (FPL). The ensuing case caused turmoil in Tallahassee, and led to Gov. Charlie Crist reshaping the PSC.

PSC action

FPL, which long has been FGT's biggest customer, is signed on to use more than half of the capacity that will be added in phase VIII. Before that signature crossed the dotted line, though, FPL tried to circumvent FGT, and save money, by building its own pipeline. New gas pipelines need approval from the PSC, the state board that regulates utilities.

FPL petitioned the PSC last April for the OK on its planned 280-mile pipeline. FGT lawyers argued the FPL plan would be bad for customers, and accused PSC staff of wrongdoing. Ryder Rudd, a manager of a department of PSC staff, attended a Kentucky Derby party thrown by an FPL executive, the discovery of which spurred an investigation.

Rudd resigned, and a report by the PSC inspector general found no wrongdoing, but noted the case was particularly contentious, with staff referring to discussions as "unnecessarily hostile." FGT lawyers asked the PSC to end the case "because of the appearance of impropriety and identified prejudice of some commission staff members."

The PSC went ahead and heard the case, denying FPL's petition Oct. 6. In a press release explaining the decision, the PSC said it "determined that FPL did not show the proposed project was the most cost-effective and reliable source of natural gas supply, transport and delivery."

"The decision from the PSC was correct," said Mike Bedley, a partner in APEX Power Services, a Davie-based energy consulting firm. "Allow the natural gas transmission companies to manage natural gas and deliver gas to the state of Florida, and let the electric companies deliver electricity."

Within weeks of the PSC's decision, FPL had signed on as the anchor customer for FGT's expansion. Crist chose two new commissioners for the PSC in October, saying he wanted to "clean house."

Impact

Gas is considered a "clean" fuel because it has lower carbon content than coal or oil, which is part of the reason the PSC is projecting Florida's gas demand to increase.

While the pipeline might bring a cleaner energy into Florida, its construction had negative impacts in the 1990s. The DEP suspended its 600-mile expansion in September 1994 and hit FGT with $210,000 in civil penalties for 38 violations, including a host of problems in Blackwater River State Forest near Pensacola. DEP officials told the St. Petersburg Times that FGT showed a "flagrant disregard" for regulations, making no effort to keep clay from staining clear-running waterways chocolate brown.

FGT spokesman John Barnett stressed it has been 16 years since those violations.

"It's a different company now. That was a long time ago," Barnett said. "We take our environmental responsibilities very seriously."

The DEP has approved of the expansion, and Barnett said inspectors closely will monitor work to ensure there is no repeat of the 1994 problems. DEP public information officer Amy Graham wrote in an e-mail the majority of the expansion runs parallel to existing lines and thus won't tear through previously untouched land.

Thompson maintains her ill feelings for FGT and said some of her neighbors are likely headed for eminent domain cases with FGT. Barnett said eminent domain is a means of last resort and that FGT will not take over a property, just install the line and pay the owner an undisclosed sum. The area around the line must be kept clear, though, so property owners with FGT lines on their land can't plant trees or do anything substantial around the line, which usually is about 3 to 5 feet underground.

Though this might not be the desired outcome for people such as Thompson, the natural gas needs of the rest of the state, from water heaters on the Panhandle to the Jaws' flames in Universal Studios, depend on the FGT pipeline.

"The fact is, if gas is needed, a pipeline is the way to get the gas into the state of Florida," Barnett said.

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