Falcon Gas Storage Co. is hoping to get its MoBay Storage Hub project on-line in time for the 2009 hurricane season. However, for that to happen the State of Alabama will have to pick up the pace in granting a lease for three depleted gas reservoirs in state waters north of Dauphin Island.

The state is wrapping up an appraisal of the reservoirs, which is required by state law before the lease can be put out for bid, another legal requirement, Barnett Lawley, Alabama commissioner of conservation and natural resources, told NGI. He said last Wednesday that results of the appraisal could come back in two weeks. Then the lease would be put out for bids for 30 days. After that, bids are opened and the state has up to another 30 days to make a decision.

That means the earliest MoBay Storage might be awarded a lease is mid-November, and it could be as late as the second half of December. In its implementation plan filed with FERC, Falcon, of which MoBay Storage LLC is a subsidiary, has requested a construction start date of Nov. 1, Falcon COO Edmund Knolle told NGI.

"The only thing that the project is waiting on is the storage rights," Knolle said. "It's our intention to be in construction by November to meet an in-service date prior to April 1, 2009. Time is of the essence, and we are encouraging the state to expedite the process so this facility can be put into service before the 2009 hurricane season."

MoBay received its certificate under Section 7 of the Natural Gas Act from the Federal Energy Regulatory Commission in January (see NGI, Jan. 8). Air, water and U.S. Army Corps of Engineers permits all have been granted, Knolle said. The lease is the only thing standing in the way, and depending on how the bidding goes, it might become a bigger obstacle.

Asked if he thought there would be bids to lease the reservoirs other than Falcon's Lawley said, "I would hope so. That's the best way to establish what the market value is." Knolle and Falcon maintain that the FERC certificate gives them the right to exercise eminent domain if Falcon is outbid in its quest to lease the reservoirs. Lawley said he doesn't see it that way.

"I don't agree...that the FERC permit gives them eminent domain. I can see eminent domain for a pipeline to get product from one place to another...This is a little different, and our attorneys don't agree with what they're saying."

Knolle noted that Falcon is the only entity to hold a FERC certificate or any permits related to the project. "In the unlikely event that, for whatever reason, another party was awarded the storage rights, we would absolutely exercise our right of eminent domain," he said.

MoBay is slated to provide 50 Bcf of working gas capacity and 1 Bcf/d of injection and withdrawal capacity at Coden, AL. The MoBay header system will provide direct, bi-directional receipt and delivery points with Florida Gas Transmission (FGT) in Zone 3, Gulfstream, Gulf South in Zone 4 and Transco in Zone 4A. Via backhaul or displacement, MoBay shippers will be able to access the expanded Destin system.

MoBay will offer firm and interruptible storage, balancing, wheeling, parking and loaning services at market-based rates. Future receipt points may include the four gas processing plants at Coden (1.3 Bcf/d) and the proposed 1.14 Bcf/d Southeast Supply Header (SESH) project planned to connect with the Gulfstream, FGT, Gulf South, Southern Natural Gas, Columbia Gulf Transmission, CenterPoint Energy Gas Transmission, Texas Eastern Transmission and Tennessee Gas pipelines (see NGI, June 26, 2006).

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