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DEGT Jumping Into Gulf Coast Storage Development Fray

Duke Energy Gas Transmission (DEGT) plans to expand its Gulf Coast salt cavern storage facilities by more than 35 Bcf over the next six years. The company's storage projects now join a slew of others targeted at balancing supply and demand with greater flexibility.

The three facilities -- strategically located between premium markets and growing supplies, including liquefied natural gas -- are located at Egan in Acadia Parish, LA; Moss Bluff in Liberty County, TX; and the proposed storage facility in Copiah County, MS. When all projects currently planned are completed by 2012, the three facilities will have a total working capacity of about 70 Bcf.

DEGT's plans are a prime example of a larger trend of substantial gas storage additions in the Gulf Coast, of which FERC recently alerted Congress. The projects will represent 4,380 MMcf/d of new peak-deliverability capacity and 125 Bcf of storage capacity, the Federal Energy Regulatory Commission said in its "Strategic Plan for Fiscal Years 2006-2011," which was submitted to the Senate, House and Office of Management and Budget (see Daily GPI, Oct. 2).

"The excellent response we received to our Market Hub Partners open season earlier this year (see Daily GPI, May 1) indicates that salt cavern storage for natural gas will continue to play an important role in balancing supply and demand, particularly for the growing Southeast and Northeast United States markets," said Mark Fiedorek, vice president, asset optimization and storage development. "These strategically located facilities across the Gulf Coast provide our customers with attractive supply and market access and customized services to meet their growing natural gas marketing requirements."

Of particular interest to shippers is Houston-based DEGT's storage assets at Egan, Fiedorek noted.

"Our recent enhancements, along with anticipated interconnects with LNG supply headers, positions Egan as the key storage provider in the LNG market," Fiedorek said. "We plan to file an application with the Federal Energy Regulatory Commission in early 2007 to increase the capacity of the Egan facility from 24 Bcf at the end of our current expansion to 32 Bcf through the development of a fourth cavern at this site."

Other expansion plans for DEGT's storage assets include adding 8 Bcf at the Moss Bluff facility by 2011, and seeking approval from FERC to increase the already certificated Copiah facility from 3.3 Bcf to 15 Bcf by 2012.

The three Market Hub Partners facilities are assets of DEGT, which announced earlier this year that it will separate from Duke Energy, along with Duke Energy's 50% ownership in Duke Energy Field Services (to be called DCP Midstream). The two entities will become a pure-play company known as Spectra Energy Corp that is expected to begin trading on the New York Stock Exchange as an independent company on Jan. 2, 2007.

Duke isn't the only company with storage projects in the works. Other gas storage development/expansion activity includes:

Enterprise Products Partners LP said last month it is planning to convert an existing natural gas liquids salt dome storage field in Mont Belvieu, TX, into a 10 Bcf natural gas storage operation. The project would include pipeline interconnects with Enterprise Texas Pipeline, Enterprise Texas Intrastate (Channel), Kinder Morgan Texas Pipeline and Texas Eastern Transmission (see Daily GPI, Nov. 16).

Mobile, AL-based Bay Gas Storage Co. Ltd. recently held a nonbinding open season for 10 Bcf of storage capacity at its facility in McIntosh, AL. The open season relates to the planned development of two new 5 Bcf. high-deliverability, underground caverns in the McIntosh salt-dome, together with planned pipeline interconnects with Transco (Station No. 85) and SONAT (York, AL). The new caverns and pipeline interconnects are scheduled to begin service by fall 2000 (see Daily GPI, Oct. 6).

In June Falcon Gas Storage's MoBay Storage Hub Inc. subsidiary filed an application with FERC to develop a new 50 Bcf high-deliverability storage project in southern Alabama, where it will be connected to the Gulfstream, Transco, Gulf South and Florida Gas Transmission pipelines. The project will add another multi-cycle gas storage field with market-based rates to the Gulf Coast region (see Daily GPI, June 23).

Also in June, Kinder Morgan Energy Partners LP (KMP) said it will spend $76 million to expand its Dayton gas storage field in Liberty County, TX. The project, which involves development of a new underground cavern, will add an estimated 5.5 Bcf of incremental working capacity. Two existing storage caverns currently provide 4.2 Bcf of working gas capacity (see Daily GPI, June 9).

A company called Mississippi Hub LLC is assessing the viability of an underground storage facility in Simpson County, MS (see Daily GPI, June 26).

Earlier this year, Haddington Ventures III LLC subsidiary Bobcat Gas Storage filed with FERC to construct and operate a high-deliverability project in St. Landry Parish, LA, near Eunice and the Henry Hub. Like DEGT, Bobcat backers tout their project's location between the production and market zones, allowing the facility to access many different sources of supply and deliver to multiple market regions through its planned connection with five interstate and one intrastate pipeline systems. The project was announced last year (see Daily GPI, Dec. 15, 2005).

DEGT storage facility details:

Egan Hub (Total capacity: 32 Bcf by 2010)

Moss Bluff (Total capacity: 23 Bcf by 2011)

Copiah Storage (Total capacity: 15 Bcf by 2012)

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