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Industry Briefs

Southeast Gas Storage LLC (SGS), an affiliate of El Paso Corp.'s Tennessee Gas Pipeline Co., has launched a nonbinding open season for its proposed Black Warrior Storage Project, a greenfield underground natural gas storage facility to be located in northeastern Mississippi. The proposed storage facility would have a total working natural gas capacity of 20 Bcf and provide for a three-turn service. The project would interconnect with Tennessee's 500 Line, downstream of its Columbus Compressor Station in Zone 1, through a new 24-inch diameter pipeline. Based on the initial project design, the high-deliverabiity, multi-cycle facility would provide up to 333 MMcf/d injection rates and 375 MMcf/d withdrawal rates. The open season would allow SGS to evaluate the market interest, economics and design parameters for the project, the company said. Based upon the results of the open season, SGS said it would determine the project's scope and whether to proceed with a binding open season. With enough market interest, SGS said it expects to file the project with the Federal Energy Regulatory Commission in May and would request authority to charge market-based rates. The proposed in-service date is June 2010. SGS noted that even though the open season is nonbinding, only bids received during the subscription period for the open season would be guaranteed consideration for service in the project. The open season will end at 4 p.m. CDT on May 14. Project details are available here or by contacting Sital Mody at (713) 420-4336, Stuart Neck at (713) 420-2230 or Heath Deneke at (713) 420-3812.

Dutch financier ING Group is setting up a Houston office to focus on upstream services primarily for the exploration and production (E&P) sector. ING Wholesale Banking, the corporate and investment banking division of ING Group, said it strengthened its structured finance natural resources practice in the Americas by hiring five senior bankers from Comerica Bank to manage the Houston branch. The Houston unit will be led by Charles Hall, who helped to build Comerica's upstream and midstream energy banking effort over the last seven years. Prior to Comerica, Hall was executive director of the Emergency Oil and Gas Loan Guarantee Board, a joint operation of the Federal Reserve Bank and the U.S. Department of Commerce, which administers a pool of federally funded energy development loans. Hall also was previously employed for eight years by Den Norske Bank in its energy finance group. Hall will be joined by former Comerica energy finance group's Juli Bieser, Michael Price, Huma Manal and Josh Strong. Hall and his team will report to Richard Ennis, head of ING's Natural Resources Americas. ING Wholesale Banking is one of the six business lines of ING Group and is responsible for providing financial products and services to corporate and institutional clients across Europe, the Americas and Asia. ING's U.S. Natural Resources team was awarded Project Finance's 2007 North American Oil & Gas Deal of the Year.

OGE Energy Corp. subsidiary Enogex LLC will provide gas gathering, processing and transportation for Chesapeake Energy Corp. production in the Colony Granite Wash play in Custer and Washita counties in the Anadarko Basin of western Oklahoma. Enogex intends to invest more than $55 million in gathering and transportation pipeline infrastructure and a processing plant near Clinton, OK. The plant is expected to be in service in 2009 and will process up to 120 MMcfe/d. Chesapeake is the largest producer of gas, the most active driller and the largest leasehold owner in the various Granite Wash plays of the Anadarko Basin and is currently using 12 operated rigs to further develop approximately 200,000 net acres of Granite Wash leasehold. Chesapeake believes it owns a backlog of more than 650 net wells to drill in its various Granite Wash plays, including approximately 250 Colony Granite Wash wells. From the Colony Granite Wash, Chesapeake is currently producing approximately 55 gross MMcfe/d from 18 gross (12 net) operated wells.

FERC gave SG Resources Mississippi LLC a conditional go-ahead to place into service the first of three caverns at its high-deliverability salt dome natural gas storage facility in Greene County, MS. The initial storage cavern of the Southern Pines Center will hold up to 8 Bcf of working gas, with capacity reaching 24 Bcf when all three caverns are completed (see NGI, Jan. 29, 2007). The company said it currently expects to bring two caverns into service this year, with a third due to become operational in 2010. Houston-based SG Resources Mississippi, a subsidiary of SGR Holdings LLC, said it has the capability to develop a fourth and fifth cavern in the future, bringing total capacity to 40 Bcf. FERC also approved for operation direct interconnects between Southern Pines and Destin Pipeline Co., Florida Gas Transmission (FGT) and Transcontinental Gas Pipe Line (Transco), which will serve markets in the U.S. Southeast and Northeast. FGT's interconnection with the storage facility will accommodate receipts and deliveries of up to 1 Bcf/d, while the Transco interconnection will accommodate up to 600 MMcf/d. In addition, the storage facility will have indirect access to Southern Natural Gas, Gulf South Pipeline, Gulfstream Natural Gas System and Tennessee Gas Pipeline by way of Destin and another new interconnect with Gulfstream by way of Transco and FTC, according to the company. An interconnect with the Southeast Supply Header is scheduled to go into service in the second quarter of this year, SG Resources said.

A unit of Naperville, IL-based Nicor Inc. plans to launch a nonbinding open season for a 5.5 Bcf independent underground natural gas storage facility in the central valley of Northern California, north of Sacramento. The open season runs through May 30. Start-up of the project could be in 2010. The open season seeks what the developer is calling "nonbinding expressions of interest for the initial working capacity." Upon completion of the process and receipt of acceptable expressions of interest, Central Valley Gas Storage LLC plans to file with the California Public Utilities Commission (CPUC) seeking authority to construct and operate the market-based storage facility. Central Valley will seek to permit the project, and Nicor Enerchange LLC will serve as the marketing arm of Central Valley for a project that is in the same general area as at least two other independent storage operations that have been expanding. All are connected to the Pacific Gas and Electric Co. transmission backbone pipeline system that traverses the area, an expanse of agricultural lands in and around abandoned dry gas fields. Nicor's unit proposes to build a high-deliverability storage operation at a depleted reservoir that it said could provide a three-turn firm service with 5.5 Bcf of working gas capacity. In addition, Central Valley thinks the project has the potential to support 8 Bcf in total working gas capacity if the market demand warrants it. The proposed facility would interconnect with PG&E transmission Lines 400/401 at a point that would be considered a "PG&E citygate" point similar to other independent storage facilities connected to the San Francisco-based utility's system and will provide access to West Coast natural gas and power markets. Additional information for the Central Valley project is available from John Fortman, hub administration services manager for Nicor Enerchange, at (630) 245-7845 or jfortma@nicor.com, and through the website www.cvgasstorage.com.

Under a controversial state law passed three years ago (SB 408), the Oregon Public Utility Commission (PUC) has made its first across-the-board rate adjustments for the state's four major private-sector utilities. This theoretically matches the tax bills paid by the utilities with the amounts they collect in retail utility rates to pay for them. Two utilities were found to be undercollected and are authorized rate increases of 3% (PacifiCorp) and 3.8% (Northwest Natural Gas Corp.). The other two received decreases of 1.4% (Portland General Electric, or PGE) and 1.9% (Avista Natural Gas) because they were overcollected. The rate increases for PacifiCorp and Northwest Natural Gas and the decreases for PGE and Spokane, WA-based Avista take effect June 1. Oregon's major private-sector utilities filed with the PUC in January, submitting their 2006 tax reports. Regulatory staff has since reviewed the filings, carrying out its responsibilities under the 2005 SB 408 that has been a source of controversy as much or more so as the tax issue it was enacted to resolve. Last year two of the major utilities called for repealing the law, but when the utilities made their initial mandatory tax filings in October, the PUC moved quickly to begin its six-month review process. The law grew out of a concern that utilities were collecting more in taxes as part of customer rates than they were paying out to governments. The average amounts of monthly rate changes for residential customers are a $1.10 reduction for PGE; a $1 decrease for Avista gas customers; a $2.05 one-time increase for PacifiCorp; and because of some other unrelated tax issues, Northwest Natural will get an $8.37 one-time decrease for its residential customers, the PUC said.

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