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.
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