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Western Undeterred By Grueling Regulatory Process

Western Undeterred By Grueling Regulatory Process

Expressing frustration but continuing its resolve, Texas-based Western Hub Properties is ironing out some "technical issues" of financing with California regulators and now expects to start construction in February on its delayed Lodi gas storage field in northern California.

The merchant storage project will be operating by this time next year, said Western Hub's California-based manager, Jim Fossum, who added that with faster approvals, the project could have been in service during this summer's electricity generating crunch and the current gas and power shortages.

Despite the regulatory struggle, he said the company still plans to go through with its other California storage project near Bakersfield and the natural gas hub called Wheeler Ridge. Western has acquired leases on the property it needs and will start more detailed engineering of the proposed site over the first three to six months of next year. The company intends to make a filing with state regulators in summer of 2001.

In both the approved Lodi project and the proposed Wheeler Ridge storage field, Western is not concerned about lining up customers, said Fossum. The projects are not contingent on contracts, he said. "Now that we are a bona fide (certified plant) utility under the California Public Utilities Commission, we are getting some technical things worked out with the commission staff and nailing down the last small pieces of property, Fossum said. "Everything is basically ready to go at Lodi"

"We have to file with them documents that verify certain aspects of the project's financing. We can't move ahead with the financing until the CPUC approves it.

"If we had not encountered all of the roadblocks that we have had, we could have helped with the problems this last summer, and we could be helping with problems right now." He added that the project would not be operational in time to have any impact on the upcoming summer electricity demand and corresponding heavy natural gas demand to fuel power plants.

Lodi and the Wheeler Ridge storage project are being designed as high-deliverability storage facilities. Lodi will have about 9 Bcf of working capacity, building to 12 Bcf. Initially, Fossum said, Lodi should have about 400 MMcf/d injection capability and 500 MMcf/d withdrawal.

In the southern half of the state, Western for some time has been doing reservoir studies near Wheeler Ridge and now has a "couple of reservoirs that we think might work," Fossum said. "We're in the preliminary planning phase."

The Wheeler Ridge project would have an ultimate working capacity of 12 to 16 Bcf and similar 500 MMcf/d deliverability at its peak. He said Western hopes to have something operational in the Wheeler Ridge area by the end of 2002.

Richard Nemec, Los Angeles

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