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Bay Gas Eyes Third Storage Cavern in Alabama

Bay Gas Storage Co. Ltd., a subsidiary of EnergySouth Inc., said Friday it plans to begin developing a third underground natural gas storage cavern and related facilities near Mobile, AL, in May, a move that would nearly double its working gas storage capacity.

The new cavern would add 5 Bcf to Bay Gas Storage's current working gas capacity of approximately 6 Bcf, according to the Mobile-based company. The initial phase of the storage project is expected to be placed into service by the summer of 2007.

Bay Gas Storage's McIntosh field, which is located 40 miles north of Mobile, has the capability of adding 10 additional salt caverns. It currently has two gas storage caverns with direct pipeline interconnects to Florida Gas Transmission, Gulf South Pipeline and Mobile Gas Service Corp. The twin caverns have injection and withdrawal capacities of 200 MMcf/d and 610 MMcf/d, respectively, all of which is fully subscribed.

The expansion is not fully subscribed, according to spokesman Wes Phillips. Bay Gas noted it has reached an agreement with BP Energy Company to provide storage services, subject to receipt of approvals and other arrangements and completion of the expanded storage capacity.

The storage expansion project is "consistent with the market interest" the company received during an open season last summer, said Bay Gas President Greg Welch.

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