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Tres Palacios Storage Cavern Downsizing Bid Draws Opponents

The latest bid by Tres Palacios Gas Storage (TPGS) to reduce the FERC-certificated capacity at its underground natural gas storage facility on the Gulf Coast has drawn protests from Riverway Storage Holdings LLC and Underground Services Markham (USM), which opposed the company's last attempt to reduce its capacity.

A little more than a year ago, the Federal Energy Regulatory Commission denied TPGS's request to abandon a portion of its storage capacity that it could not successfully market (see Daily GPIMarch 19, 2015). Such an abandonment would have reduced the company's cavern lease payments to Riverway and USM.

Riverway and USM recently filed protests to TPGS's latest attempt to abandon capacity, which was filed confidentially earlier this year as the company said it contained critical infrastructure information.

In its order denying TPGS's earlier request, FERC said in any subsequent application the company would need to specify changes to the existing certificated parameters of its storage caverns and provide evidence that such changes would not harm the integrity of the caverns.

In its amended application filed earlier this year, TPGS said there had been a physical change to the caverns that resulted in the loss of 20% of storage capacity, USM said in its protest [CP16-145].

"The application provides no explanation of how, why or when this capacity reduction occurred; nor did Tres Palacios submit any evidence demonstrating that the capacity reduction will not adversely affect the integrity of the storage caverns," USM said in its protest. It called for FERC to reject the application or require that TPGS submit supplemental information and schedule a technical conference or a hearing.

Riverway in its protest enumerated objections similar to those of USM and said that TPGS's designation of so much information as confidential hindered its consideration of the company's arguments.

"TPGS provides insufficient information to verify its theoretical estimate of cavern volumes," Riverway said. "Worse, to the extent that TPGS's reports included with the application identify assumptions made, the results of TPGS's analysis demonstrate that the assumptions are false."

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