In a complete about-face, Southern Company now appears to be astrong champion of an amended deliverability expansion of Petal GasStorage LLC and has asked FERC to process the application as”quickly as practicable.”

Southern, which signed up for much of the expanded storagevolumes planned by Petal, clearly spelled out its support in aletter to the Commission after Daniel Adamson, director of FERC’sOffice of Energy Projects, earlier this month threatened to dismissPetal’s storage deliverability project for a lack of market supportunless Petal could prove otherwise.

Adamson took this action when Southern initially expressedreservations that the Petal project, after being amended inmid-February, didn’t satisfy the terms and conditions of itsprecedent agreement with the storage company. This prompted someconcern that Southern might pull out as a major customer of Petal’sstorage-capacity expansion, which FERC approved in March[CP99-615].

Southern contracted with Petal for 7 Bcf of the expanded storagecapacity and 700,000 MMBtu/d of firm storage deliverability. Butthe agreement was based on a commitment by Petal to build pipefacilities to deliver gas to interconnections with Southern NaturalGas, Destin Pipeline and Transcontinental Gas Pipe Line. However,Petal in the amended proposal scrapped the three interconnects infavor of an expansion of its existing interconnect with affiliateTennessee Gas Pipeline [CP00-59]. Additionally, it indicatedTennessee planned to seek FERC authority to expand its 500 Line toaccommodate increased deliveries from Petal.

In response to the revised application, Southern Companyoriginally said it had doubts as to whether Petal’s amendedproposal and Tennessee’s planned expansion, an application forwhich hasn’t been filed yet, could satisfy the “commercial terms”of its agreement with Petal. Clearly, it noted Petal’s amendedproject alone “does not do that since it fails to provide SouthernCompany with 700,000 MMBtu per day of firm storage withdrawalcapability delivered into Southern, Destin and Transco.”

But now Southern says it’s fully behind Petal. It “opposes thedismissal” of Petal’s project, and disputes Adamson’s claim that itlacks market demand. “From Southern Company’s perspective, that isnot the case since….., for all practical purposes, SouthernCompany is the market and it supports Petal’s amended application.”And who should know better, Southern said, than the “intendedbeneficiary” of the proposed deliverability facilities.

Southern said the proposed deliverability project, which callsfor an additional 20,000 horsepower of compression, a storageheader loop and an expanded interconnect with Tennessee, is a”necessary complement” to Petal’s storage-capacity expansion that’salready been approved by FERC. The expansion is expected to boostthe working gas capacity of Petal’s two Mississippi storagefacilities to 10 Bcf by June 2001.

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