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FERC Approves 17 Bcf Liberty Gas Storage Facility in Louisiana

FERC last Thursday issued a certificate to Liberty Gas Storage LLC to build a 17.6 Bcf natural gas storage facility in Louisiana to accommodate the expanding network of liquefied natural gas (LNG) projects in the Southeast and satisfy the demand of gas-fired power plants in the region.

FERC "finds that Liberty's proposed project will serve the public interest by providing high-deliverability storage service, which is in demand in the Gulf Coast area, without significant landowner or environmental impacts," the order said [CP05-92, CP05-93, CP05-94]. "The proposed storage service will further the development of the natural gas infrastructure necessary to meet the storage needs of gas-fired electric generation plants and to store regasified liquefied natural gas (LNG) from LNG terminals currently in service, approved or proposed for the Gulf Coast region."

The Federal Energy Regulatory Commission also granted Liberty Gas Storage, which is jointly owned by SEI Storage Corp., authorization to charge market-based rates for its storage and hub services. SEI Storage is a wholly owned subsidiary of Sempra Energy International and ProLiance Transportation and Storage-Liberty LLC.

"Liberty's market power analysis shows an [Herfindahl Hirschman Index] of 1,452 for working gas capacity and HHI of 1,112 for peak-day deliverability. These measures of market concentration are well below the Commission's threshold level of 1,800, indicating that Liberty would be unable to exert market power in the relevant market after the construction of its proposed storage facility," the order said.

In addition, Liberty's market power study identified that 23 alternative market storage facilities are located in the relevant market, providing gas customers with a wide range of options, it noted.

The proposed facility, to be located near Sulphur, LA, would be in close proximity with two pipelines being developed by Sempra Energy in connection with its Cameron and Port Arthur LNG terminal projects.

The project entails the conversion of two existing brine solution mining caverns to high-deliverability gas storage caverns. The facility would have 17.6 Bcf of working gas storage capacity, with the capability to deliver at a rate of about 1 Bcf/d and inject at a rate of approximately 500 MMcf/d.

It also calls for the construction of a 1.3-mile, 20-inch diameter pipeline that would connect the gas storage cavern wells to a new on-site compressor station in Calcasieu Parish, LA; and the construction of a new compressor station in Beauregard Parish, LA.

In addition, Liberty Gas Storage's proposes a new 23.3-mile, 30-inch diameter bidirectional pipeline header system in Calcasieu Parish that would interconnect with up to seven interstate pipeline systems, including Florida Gas Transmission, Tennessee Gas Pipeline, Texas Eastern Transmission, Transcontinental Gas Pipe Line and Trunkline Gas, in Calcasieu and Beauregard Parishes.

The project, which is expected to be completed in mid-2006, would have access to more than 8 Bcf/d of interstate pipeline capacity linked to multiple markets and would be adjacent to significant industrial loads that have been under increasing pressure to stabilize their natural gas costs, according to Liberty Gas Storage.

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