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El Paso Gets NGA Waiver to Conduct Testing for New Storage Project in Arizona

Citing the scarcity of natural gas storage in the Southwest, FERC has granted El Paso Natural Gas a waiver of the Natural Gas Act (NGA) certificate requirements to carry out drilling and testing activities to determine the feasibility of developing new storage facilities in south-central Arizona.

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, AZ that it purchased to develop a natural gas storage facility. If development of a storage facility is viable and demand for storage services exists, El Paso Natural Gas said it plans to apply to the Federal Energy Regulatory Commission for a Section 7 certificate to build one or more gas storage caverns.

The pipeline said testing, which would involve drilling to a depth of 7,500 feet through salt beds and into rock formations, would take approximately three months.

"We find it in the public interest to exempt the proposed activities from the certificate requirements of NGA Section 7(c). Given the limited availability of storage facilities in the vicinity of the potential storage site, we acknowledge the potential benefit a new storage facility would provide. Further, we find that without performing the proposed activities, El Paso cannot make an informed business and engineering decision regarding the feasibility of developing a new storage complex," the FERC order said [CP06-69].

A group of producers supported El Paso's petition for the waiver, but it asked the Commission to impose conditions that would require El Paso in its reports on testing activities to disclose the costs and state whether or not it plans to proceed with the storage facility. FERC rejected Indicated Shippers' request.

"Indicated Shippers have not provided any good reason to require El Paso to expand the content of the reports it has already filed and will file pursuant to its petition. Neither is there good reason supplied for requiring El Paso to report its conclusions regarding whether it will or will not proceed with this storage project and its reasons for those conclusions. The Commission has not required other similarly situated applicants to file this type of information," the order said.

The order requires El Paso to notify the Commission within 10 days of beginning its activities, and to complete drilling and testing within one year of the order.

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