FERC last week gave Petal Gas Storage LLC. the go-ahead toexpand an existing interconnect between its storage cavernfacilities in Mississippi and affiliate Tennessee Gas Pipeline,despite strong objections from shippers that the company’s projectwas an overt display of affiliate preference.

Specifically, Petal was awarded a certificate to build a 5.5mile, 36-inch diameter storage header loop, add 20,000 horsepowerof new compression and associated facilities within or adjacent toits storage facilities in Forrest County, MS.

Petal sought permission to expand its interconnect withTennessee’s 500 Line in an amended application that it filed lastFebruary [CP00-59-001]. The revised proposal nixed the storagecompany’s initial plans to build facilities to interconnect withTranscontinental Gas Pipe Line Corp., Southern Natural Gas andDestin Pipeline in favor of the expanded interconnect withTennessee, which prompted shippers to accuse Petal of affiliatefavoritism and exerting market power over storage in the Gulf Coastregion.

El Paso Energy, which owns Tennessee, acquired Crystal GasStorage Inc., Petal’s parent company, last January.

But FERC didn’t share shippers’ concerns. “While the deletion ofthe proposed interconnects [in the initial application] abrogatesPetal’s accessibility by shippers on Destin, Sonat and Transco,there are numerous other [storage] alternatives available to thoseshippers in the production area,” the order said. It noted thereare 47 storage facilities in the Gulf Coast from which shippers canchoose, with an existing working gas capacity of 658,204 MMcf/d andmaximum deliverability at 18,915 MMcf/d.

There was nothing in Petal’s amended proposal to justifywithdrawal of the market-based rates for storage services that FERCpreviously had awarded the company, the Commission said. Petal cancharge market-based rates “provided [it], its parent company(Crystal) and El Paso Energy continue to operate their storagefacilities independently.” But Petal’s market-based rate authoritywill be subject to periodic re-examination in the event itconstructs new storage facilities or another affiliate enters thestorage or transportation market in the Gulf production region, theorder noted.

Petal sought to expand its deliverability on Tennessee when FERCapproved its proposal to expand the total storage capacity of itsMississippi caverns by 5.4 Bcf and working gas capacity by 4.8 Tcfto meet the growing demand for storage service by electricgeneration facilities in the Southeast. Southern Company Serviceshad signed up for much of it, executing a 20-year agreement for 7Bcf of firm storage capacity.

Susan Parker

©Copyright 2000 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.