Florida Power & Light (FPL), Florida’s largest utility, announced on June 25 that it was looking to invest directly in natural gas exploration and production as a means of securing future gas supplies and guarding against price volatility.

NextEra Energy subsidiary FPL, the largest consumer of gas in the state, has been rapidly expanding its natural-gas fired generation capacity over the past few years, with three big combined cycle plants—at Cape Canaveral, Riviera Beach, and Port Everglades—coming online or beginning construction in the past year, and three more in the early planning stages.

But most of that gas comes from outside the state via just two interstate pipelines (a third is under construction), and that fact worries FPL management.

On June 25, FPL asked the Florida Public Service Commission (FPSC) for approval to partner with PetroQuest Energy Inc., on a new venture to develop up to 38 natural gas wells in the Woodford Shale in Oklahoma. PetroQuest, an independent oil and gas company in the region, would oversee and operate the wells. The deal would involve FPL buying out a contract from USG Properties Woodford—another NextEra subsidiary formed for this initiative—for $68 million. FPL would also invest up to $120 million in the new wells over the next 30-odd years. In exchange, FPL would get a portion of the production.

As part of its petition to the FPSC, FPL requested approval of draft guidelines for natural gas production projects to allow it to take advantage of future opportunities. Current rules only allow FPL to engage in short-term hedging; this approach will help FPL protect itself over the long-term.

“With a growing fleet of cleaner, fuel-efficient natural gas-fired power plants and contracts for reliable and diverse gas transportation in place, we believe this to be the next logical step in providing clean electricity for our customers at affordable prices,” said Eric Silagy, FPL president and CEO. “This investment in natural gas production is an important component for delivering lower, more stable natural gas prices for our customers, and we anticipate identifying additional investment opportunities, thereby benefiting our customers even more over the long term.”

The project is hopefully only a start, FPL said. The savings over 30 years would be around $100 million—a tiny fraction of its $4.5 billion annual fuel costs—but FPL hopes this paves the way to better securing its future gas needs against price spikes.

The FPSC will address the request as part of its review of FPL’s annual fuel-cost recovery program this fall. A decision is expected some time thereafter.

—Thomas W. Overton, JD, is a POWER associate editor.