HONOLULU -- Honolulu Seawater Air Conditioning has scaled the first major regulatory hurdle to constructing a $250 million system to help downtown businesses cut their electricity bills.

Engineering project manager Scott Higa said the system will use a thick pipe about five feet wide which will be placed in the deep ocean about four miles offshore.

“It will be able to withstand the stresses of deployment as well as over its life to withstand largest storm surf and hurricane waves,” said Higa.

The pipe will be in water close to 2000 feet deep. The cold water will be sucked up and transported through the pipe into a special system feeding into downtown.

"They transfer the cold from the seawater to a separate loop filled with freshwater. That freshwater is then pumped to the individual buildings downtown," said Higa.

The water would be pumped back to a cooling plant located on Kiawe Street and through a heat exchange process would return the seawater back to the ocean. The water, which would be about 10 degrees warmer, would be dissipated rapidly to try and minimize the impact on marine life.

The project still needs the okay from the Army Corps of Engineers and contracts with perspective customers have to be finalized.

"You can only pump up so much cold seawater. There is greater demand but we can only service 40 of the largest commercial buildings," said Higa.

The pipe will be placed on the Diamond Head side of the channel near Pier 1 and will run through a tunnel under the Ewa end of Kakaako Waterfront Park.

The project is to create 1,000 construction jobs. The work may include some trenching to lay pipes.

Higa said some of the work will be done at night to minimize the effect on traffic. The company hopes to get all its permits by the end of the year with groundbreaking to take place in the early part of 2012.

The goal is to begin supplying ocean air conditioning by the end of 2013.