Northeastern Gas Caverns LLC, a New York company, has purchasedall the salt cavern drilling rights, licenses and equipment ownedby the bankrupt Avoca Natural Gas Storage Co. for $8 million,promising to revive the project, once highly touted as the firsthigh-deliverability salt cavern storage in the Northeast. NGC alsohas agreed to assume a portion of Avoca’s secured debt.

Avoca filed for bankruptcy in May 1997 after it failed to findan acceptable way to dispose of the brine that is a byproduct ofleaching the underground salt to form the storage caverns. Theinitial deep brine disposal wells drilled by Avoca did not haveenough permeability and were able to take only 25% of the brine.Another scheme to run a pipeline to a Watkins Glen, NY salt plantalso fell through. Observers say there currently is a glut in themarket for salt, which makes disposal only slightly less difficultthan more toxic wastes.

Texas and Louisiana, where much of the nation’s salt cavernstorage is located, border the saltwater Gulf of Mexico so disposalis not a problem. Inland in New York State, environmentalists andfishermen have campaigned to keep the salt brine out of localfreshwater streams and the water table.

The new owners, a private company represented by Leonard “Buzz”Nave, a Kentucky attorney and Shawn Griffin, a New York attorney,have not said how they will deal with the disposal problem. Theattorneys said the new owners are private investors, not affiliatedwith any energy companies.

Avoca had been backed by Dynegy, Bechtel and PG&E’s USGenerating, and Equitable Resources. The partners and banks hadsunk a total of $80 million into the project by the time Avocafiled for Chapter 11. At the time the company listed $56 million inliabilities.

The Avoca project is in southwestern New York State near theborder with Pennsylvania and not far from another highly toutedsalt cavern storage project, Tioga Gas Storage, also called theNortheast Hub. The latter has been planned by Market Hub Partners,whose 66% owner, Houston-based TPC Corp., was recently acquired byNipsco.

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