Arizona regulators are expected to finish their current review and decide whether to beef up the state’s natural gas infrastructure, including first-ever storage, by some time in September, a Phoenix-based spokesperson for the Arizona Corporation Commission (ACC) said Monday.

The ACC issued a “notice of inquiry” (NOI) on the gas infrastructure system last April; and its staff is now sifting through the various responses from major energy players in Arizona, ranging from Arizona Public Service, to merchant operators, such as North Baja Pipeline and Phoenix-based Copper Eagle Gas Storage. The staff will make a recommendation to the five-member commission in the next few weeks, the spokesperson said.

A number of proposals in the conceptual stage for expanding Arizona gas infrastructure have surfaced through the process, the ACC spokespersons said, including expanded interstate pipeline service and/or capacity from Kinder Morgan, Power-UpCorp., Transwestern Pipeline Co., and Pacific Texas Pipeline & Transportation Co.

“Another group calling itself the Desert Crossing Gas Storage & Transportation System, LLC, is looking at possible pipeline and storage facilities that would draw on supply lines running through Nevada,” said the spokesperson, who noted there is the possibility of expansion of the Sempra Energy-PG&E North Baja Pipeline running from the Arizona-California border to North Baja, paralleling the international border, to make more gas available to wholesale users in Arizona.

A proposal to develop the state’s first natural gas storage facility has been raised by Copper Eagle, proposing a site west of Phoenix. It told the ACC in its response earlier in the summer that “Arizona has natural resources that are conducive to the construction of gas storage facilities,” noting that the ability to store gas near the growing Phoenix metropolitan market would improve both the flexibility and reliability of the current gas pipeline service in the state.

Copper Eagle encouraged the state regulators to push for more use of natural gas storage.

In its response to the ACC, North Baja Pipeline said its expects supplies from at least one North Baja liquefied natural gas (LNG) terminal to be available by the end of 2006.”This important infrastructure development will provide significant long-term opportunities for Arizona’s utilities to better manage their gas supply portfolios, increase reliability and decrease overall gas costs.”

North Baja noted that it is in the process of “conducting a feasibility study” and looking at potential routes for building a lateral into the Yuma area in the southwest corner of the state.

“Clearly, one of Arizona’s most pressing needs is to diversify its fuel supply to ensure that we do not remain captive to one source,” said ACC Chairman Marc Spitzer in last week’s 5-0 approval for a new gas-fired power plant in Yuma. “We don’t produce or store natural gas in Arizona so we have to look to ways to attract new gas suppliers or get serious about storage projects.”

Separately, the ACC is expected to participate in a Federal Energy Regulatory Commission technical conference on gas storage next week (Aug. 26) in Phoenix.

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