The Arizona Senate earlier this week unanimously voted to ban development of salt dome gas storage facilities within nine miles of a military airport, which places a significant roadblock in front of El Paso Corp.’s proposed 10 Bcf Copper Eagle Gas Storage project.

The Arizona House is almost certain to approve House Bill 2134 next Monday and the bill has an emergency clause, which puts it on the fast track for implementation following the governor’s vote.

El Paso, meanwhile, has vowed not to oppose the legislation, but that doesn’t mean it is giving up on the project. El Paso sees a need for storage capacity in Arizona and the salt formation near Phoenix has the best potential for housing a large gas storage dome. “We need to hear from the customers, the LDCs and electric utilities in the state, about how they want to move forward,” said El Paso spokeswoman Kim Wallace.

“I don’t think that if you talk to people, they will say they are opposed to gas storage,” said state Rep. John Nelson (R-Phoenix), who authored the bill. “We worked very hard to permit a lot of leeway to use the existing domes and whatever pipelines are necessary.” He noted that there are several other firms looking at putting new pipelines and storage facilities in Arizona. Some of the projects are “reasonably close [to where Copper Eagle was planned], but in rural areas, away from people and the Air Force base,” said Nelson. “They would pose less of a problem should there be an incident.

“With terrorism and [the accidents that can happen with storage facilities] the vapor dispersion models that we saw originally created some issues for the community, and that’s partly why I ran the bill,” he said in an interview with NGI. “When the military came out with a letter of opposition, it provided added impetus to the bill.”

Copper Eagle initially would include three gas storage caverns created out of an existing salt formation thousands of feet beneath the earth’s surface in Phoenix’s West Valley. Each cavern would have a withdrawal capacity of 320 MMcf/d, an injection capacity of 160 MMcf/d and a working gas storage capacity of 3.2 Bcf (see Daily GPI, Aug. 27, 2003). But El Paso also believes that many more caverns could be added.

Locals say that gas storage isn’t safe enough to be located only a mile away from an elementary school, a hospital, a residential neighborhood and Luke Air Force Base, which serves as the foundation of the local economy.

Despite record high gas prices and a dearth of storage capacity in the region, including only one field on El Paso Natural Gas that is used solely for balancing, landowners, local political leaders and even the top brass at the nearby Air Force base have been up in arms against the project since El Paso started promoting it last fall.

Gen. Philip M. Breedlove expressed the safety concerns of the base in a letter to El Paso earlier this year. “Having met with representatives of El Paso Gas, it is my perception that due to the close proximity of the proposed site there can be no guarantee that the gas pipeline or its storage facility will not now nor at some point in the future adversely affect the safety and security of the people at Luke Air Force Base or the Wing’s ability to conduct its national security mission.”

Concerns about giving the Air Force another reason to close the base, which provides strong support to the state economy, was a factor affecting Nelson’s decision to introduce the bill. “Everyone is aware that there is a base reduction advisory committee process that is starting and it has the potential for affecting four or five bases in the state,” he said. “Why do we want to throw a time bomb in the middle of that.”

Nelson fully expects the legislation to be passed again by the House next week and be signed by the governor. “It originally passed out of here 50-8 so I would expect we will do better than that next week,” he said. He also said the state is gearing up for a fight with federal regulators if necessary.

©Copyright 2004 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.