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FERC OKs ANR Storage Expansion in Michigan

FERC has issued a certificate approving ANR Pipeline's proposal to enhance the working gas capacity at the four natural gas storage reservoirs that the pipeline owns and operates in central and western Michigan. All told, the proposed changes will increase ANR's firm storage capacity by 13 Bcf and its deliverability by 212 MMcf/d.

ANR, a pipeline subsidiary of El Paso Corp., proposes to make construction improvements and convert base gas to working gas at the Lincoln-Freeman Storage Field and the Winfield Storage Field, and install replacement as well as new compression units at its Goodwell Storage Field. In addition, ANR seeks to convert base gas to working gas at its Reed Storage Field without any construction or modifications to the surface facilities.

ANR plans to install three new injection-withdrawal wells, a lateral pipe, a gathering pipeline and associated facilities at the Lincoln-Freeman field; new wells, a lateral pipeline, a gathering line and other facilities at the Winfield field; and two new 7,700-horsepower turbine compressors and ancillary equipment at the Goodwell Compressor Station.

These proposed modifications will result in a net increase in storage capacity and late-season deliverability of 3 Bcf and 112 MMcf/d, respectively. In addition to the upgrades, ANR proposes to reduce the storage capacity and working gas that is currently retained for system balancing to 5 Bcf from 15 Bcf, as well as the associated deliverability and withdrawal transportation capacity to 50 MMcf/d from 150 MMcf/d The modifications and reduction in storage capacity reserved for balancing would result in an additional 13 Bcf of storage capacity and 212 MMcf/d of late-season deliverability, ANR said. Currently, ANR has approximately 192 Bcf of storage capacity and 2.9 Bcf/d of design storage deliverability.

It estimated that the cost of the project, which will be constructed in two phases, will be $34.5 million. Phase I is expected to be in service by April 2007. ANR said it has signed six binding precedent agreements for a total of 17 Bcf of storage capacity in Phase I with BP Canada, Tenaska, Coral, Nexen, Madison Gas & Electric and CenterPoint. The terms range from five to seven years. The 17 Bcf will be met by the additional 13 Bcf of storage capacity and 4 Bcf that has been reserved by ANR for the project, the pipeline said.

"The project will provide additional storage capacity and improved deliverability, thus enhancing service options for existing customers," the FERC order said [CP06-358]. "Further, the project will not adversely impact other existing pipelines or their customers because the project is not intended to replace existing customers' service on any other existing pipeline."

FERC granted ANR's request to roll in the project costs in its next Section 4 rate proceeding, absent any significant change in circumstances.

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