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FERC Staff Threatens to Dismiss Petal Project

FERC Staff Threatens to Dismiss Petal Project

Absent a showing of market support, the Federal Energy Regulatory Commission staff last week threatened to dismiss Petal Gas Storage L.L.C.'s amended proposal in which it seeks to expand the deliverability of its storage facilities in Mississippi.

In the amended application, which was filed in mid-February, Petal assured FERC that its new affiliate, Tennessee Gas Pipeline, had "sufficient primary firm, secondary firm and interruptible capacity" on its 500 Line to provide downstream delivery for all of Petal's existing storage volumes, as well as for the additional volumes that would flow from a storage expansion project that was approved by the Commission in March, staff said [CP00-59].

However, Southern Company, which signed up for much of Petal's expanded volumes, has since informed FERC that the amended application doesn't satisfy the terms and conditions of its precedent agreement, staff noted. Specifically, it wouldn't provide Southern with 700,000 MMBtu/d of firm storage deliverability into interconnects with Southern Natural Gas, Destin Pipeline and Transcontinental Gas Pipe Line.

Southern Company's precedent agreement was based on Petal's original proposal, which called for new interconnects with the three pipelines. But Petal later scrapped the original proposal in favor of expanding its existing interconnect with affiliate Tennessee. In conjunction with Petal's revised proposal, Tennessee says it plans to ask FERC for authority to expand its 500 Line to accommodate increased deliveries from Petal. It has not filed an application at the Commission yet. Both Petal and Tennessee are owned by El Paso Energy.

Based upon the reservations expressed by Southern Company, "it now appears that your application is incomplete because Petal's [amended] expansion does not meet the terms of the precedent agreement with Southern.....and therefore lacks a market showing," wrote Daniel M. Adamson, FERC's director of the Office of Energy Projects, in a letter to Petal. Adamson directed Petal to respond to the Commission within five days of the April 4 letter.

Susan Parker

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