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FERC OKs MoBay Storage Hub for AL

The Federal Energy Regulatory Commission issued a certificate of public convenience and necessity under Section 7 of the Natural Gas Act authorizing MoBay Storage Hub LLC, a subsidiary of Houston-based Falcon Gas Storage Co., to develop and operate the MoBay Storage Hub Project in Southern Alabama (see Daily GPI, Dec. 14, 2006).

The MoBay Storage Hub will provide 50 Bcf of working gas capacity and 1 Bcf/d of injection and withdrawal capacity at Coden, AL. The MoBay header system will provide direct, bi-directional receipt and delivery points with Florida Gas Transmission (FGT) in Zone 3, Gulfstream, Gulf South in Zone 4 and Transco in Zone 4A. Via backhaul or displacement, MoBay shippers will be able to access the expanded Destin system.

MoBay will offer firm and interruptible storage, balancing, wheeling, parking and loaning services at market-based rates. Future receipt points may include the four gas processing plants at Coden (1.3 Bcf/d) and the proposed 1.14 Bcf/d Southeast Supply Header (SESH) project planned to connect with the Gulfstream, FGT, Gulf South, Southern Natural Gas, Columbia Gulf Transmission, Centerpoint Energy Gas Transmission, Texas Eastern Transmission and Tennessee Gas pipelines (see Daily GPI, Dec. 22, 2006).

The MoBay hub is expected to create a major new market center for natural gas in the Gulf Coast region and is designed to provide secure natural gas supplies during extreme weather events and other deepwater supply disruptions.

Specifically, the FERC order authorizes MoBay to construct and operate a natural gas storage hub and associated pipeline facilities consisting of:

"By 2010, natural gas demand in the Southeastern U.S. is expected to increase 16% over 2004 demand," said MoBay COO Edmund Knolle. "Gas demand in Alabama alone is expected to increase by 50% during the same period. MoBay will significantly enhance energy security and reliability in this growing region, providing utilities, producers, LNG importers, gas marketers and industrials with a strategically located, highly liquid trading hub downstream of major pipeline bottlenecks."

MoBay has executed precedent agreements with six shippers for 18.3 Bcf of working gas capacity and 0.575 Bcf/d of daily withdrawal capability. Shippers include electric utilities, producers, marketers and municipal gas districts. MoBay plans to hold a nonbinding open season in February.

Already having received air and water quality permits from the Alabama Department of Environmental Management, MoBay expects to finalize remaining federal and state permitting requirements by the end of the first quarter and start construction in April. The target in-service date is April 1, 2008.

Through its wholly owned subsidiaries and affiliated companies, Falcon Gas Storage Co. is one of the largest independently owned developers and operators of high-deliverability, multi-cycle natural gas storage capacity in the United States.

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