SGR Holdings LLC said Wednesday the sale of a 40% stake in the proposed 16 Bcf Southern Pines Energy Center, a new salt dome gas storage project located in Greene County, MS, to ArcLight Capital Partners has enabled the company to begin construction on the storage field. The first phase is expected to provide 8 Bcf of working gas capacity in summer 2007.
"ArcLight invests in assets across the energy industry value chain and their in-depth knowledge of the natural gas storage business makes them an excellent partner for us in the development of Southern Pines," said SGR President Anthony J. Clark.
SGR plans Phase II development starting in 2008. The second phase will add another 8 Bcf cavern on the 80-acre Southern Pines site. SGR's Mark D. Cook said the company is in the process of selling the capacity for the second phase, but expects rapid development because of strong demand for storage space in the marketplace. "The value of storage today is virtually indisputable," said Cook.
"Supply interruptions last fall with Hurricanes Katrina and Rita have underscored the importance of natural gas storage in the Gulf Coast region," he said. "With increasing price volatility, natural gas storage is becoming a more valuable tool of the energy portfolio. In particular, the southeast region of the U.S. energy grid needs additional infrastructure to support the large growth in population and energy demand and to help synchronize natural gas supplies with the peaking needs of increasingly weather-sensitive loads."
Southern Pines is authorized by FERC to provide 12 Bcf of natural gas storage capacity on an open-access basis at market-based rates. The company plans to seek Commission approval to expand the authorized storage capacity to 16 Bcf. Once completed, the Southern Pines project will be capable of withdrawing up to 1.2 Bcf/d and injecting up to 0.6 Bcf/d.
Southern Pines has authorization to interconnect with Destin Pipeline and plans to seek authorization to construct additional interconnects with Florida Gas Transmission, Transcontinental Gas Pipe Line and Gulfstream. Southern Pines will also offer indirect access to Southern Natural, Tennessee Gas and Gulf South.
For more information on ArcLight Capital, which also has invested in the Lodi Gas Storage project in California, go to http://www.arclightcapital.com/. For details on Southern Pines, go to http://www.sgr-holdings.com/southern.htm.
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