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Falcon Storage Alums Launch New Midstream Venture

Four of Falcon Gas Storage Co.'s founders believe there's more to be done to give natural gas a temporary home in a world of growing unconventional production, unpredictable liquefied natural gas (LNG) flows and demand fluctuations among power generators.

John M. Hopper, Jeffrey H. Foutch, Keith Chandler and Thomas B. Wynne, all part of Falcon's founding management team, have formed Peregrine Midstream Partners LLC in Houston.

"Natural gas storage is still our primary focus," Hopper, one of Peregrine's four managing directors, told NGI, citing the management team's experience at Falcon developing storage in North Texas. The Falcon founders in December sold part of their equity in the company to Arcapita BSC, which took over Falcon's management (see NGI, Dec. 15, 2008).

Geographic areas of interest for Peregrine will be in the desert Southwest, Rockies, Northeast and Southeast. "We've got some noncompete constraints with Falcon, but other than that the world is our oyster," Hopper said. Indeed, Europe is in the company's plans, too.

"They just don't have enough storage [in Europe], and we think the same business model that we successfully applied with Falcon can be applied in Europe with Peregrine," he said. "There are fields over there that we think are conducive to the same type of storage development we did at Falcon."

With more gas liquefaction capacity coming on-line in the Middle East and Africa, Hopper said the regasified commodity will need a home during off-peak times, which is true in Europe and North America. Additionally, storage has value when it can provide load-following service to gas-fired power generators. "We still think gas-fired electric generation is going to play a major role in the power grid," he said.

Hopper said Peregrine is looking at several projects, all in North America, but declined to be more specific. The company recently secured funding from an undisclosed source.

In addition to building Falcon subsidiary NorTex into the largest independent gas storage company in North Texas, Falcon's founders were responsible for the initial development of the MoBay Storage Hub, which is slated to be the largest gas storage project ever developed in the southeastern United States with 50 Bcf of high-deliverability, multi-cycle (HDMC) capacity, as well as the Greyhawk-Wyckoff HDMC gas storage project in New York, a 6 Bcf facility now under construction by units of SemGroup and George Kaiser Interests.

Besides gas storage, Peregrine is focused on transportation and processing; natural gas liquids (NGL) extraction; crude oil and NGL production, storage, handling, marketing and sales in association with HDMC storage development and operations; and energy commodity risk management.

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