Gas storage-starved Arizona could be getting up to 3-4 Bcf of salt cavern capacity if initial development plans of Tempe, AZ-based Pacific Texas Energy Services LLC come to pass.

Pacific Texas Energy Services, a division of Arizona-based Pacific Texas Pipeline Co., said it is proceeding with plans to develop a storage facility in Pinal County, AZ. Noting that the state relies heavily on gas for power generation, Pacific Texas said it is particularly vulnerable to gas supply shortfalls due to the lack of storage. Operators can rely on pipeline linepack to park and retrieve some gas, but that’s about it, the company said. “There are no major underground gas storage facilities currently in Arizona.”

The company said geological studies have shown that there are several locations in Pinal County that may be suitable for a storage facility. It’s not that others haven’t tried to develop them, though.

In April 2006 the Federal Energy Regulatory Commission (FERC) cited the scarcity of storage in the Southwest in granting El Paso Natural Gas a waiver of the Natural Gas Act certificate requirements to carry out drilling and testing activities to determine the feasibility of developing storage facilities in south-central Arizona (see Daily GPI, April 4, 2006).

The El Paso Corp.-owned pipeline petitioned for the exemption so it could drill a test well on a 234-acre parcel of land in Pinal County that it purchased to develop a natural gas storage facility. At the time El Paso said that if development of a storage facility was viable and demand for storage services exists, it would apply to FERC for a Section 7 certificate to build one or more gas storage caverns. It still has not happened for a variety of reasons.

Four years ago El Paso ran into stiff local opposition and onerous state legislative proposals when it was trying to develop the 10 Bcf Copper Eagle Gas Storage project (see Daily GPI, April 16, 2004).

Arizona could improve its gas reliability and relieve some price concerns by developing storage in the state, both state regulators and private-sector utilities said late last year during a winter preparedness meeting of the Arizona Corporation Commission in Phoenix (see Daily GPI, Nov. 1, 2007).

“Approximately 65% of natural gas in Arizona is used for power generation; power plants have regularly relied upon short-term interruptible interstate pipeline capacity and have not entered into long-term firm capacity contracts to meet their prospective needs,” Pacific Texas said. “Often merchant power plants count on released or turnback capacity from other primary customers. This approach poses a risk to Arizona.”

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