Terasen Gas (Vancouver Island) Inc. (TGVI) received conditional approval from the British Columbia Utilities Commission (BCUS) to construct and operate a 1.5 Bcf natural gas storage facility on Vancouver Island.

When TGVI filed its application with the BCUS in June the company estimated that the project would cost C$175-200 million (see NGI, June 11). After the commission approved the application, Terasen Inc. CEO Randy Jespersen said the company is now in a position to finalize contracts for materials and resources in order to complete construction cost estimates.

"This work will ensure the final project cost estimates will meet the conditions provided in the decision," Jespersen said. The BCUS awarded the rate of return on equity associated with the Vancouver Island project but did not approve the adjustment requested in the application, he said.

Construction on the project is expected to begin in April 2008, and the facility is scheduled to come into service by late 2011. The project has been in development since 2004.

The facility, which will be supplied by the company's existing pipeline systems, will allow Terasen Gas to meet current and future gas demand on Vancouver Island and throughout its service territory by storing liquefied natural gas (LNG). The 142-hectare project site, known as Mt. Hayes, is located approximately six kilometers northwest of Ladysmith, BC.

"This new storage facility would allow Terasen Gas to become more self-sufficient in meeting its winter peaking requirement by reducing its reliance on other storage facilities located in the Pacific Northwest," said Doug Stout, Terasen Gas vice president, marketing and business development. "It would also allow for more efficient use of Terasen Gas's existing pipeline systems and result in improved reliability and security of supply during planned or unplanned system interruptions."

Terasen Gas is mainly composed of the operations of Terasen Gas Inc. and TGVI, both indirect wholly owned subsidiaries of Fortis Inc., which serves almost two million gas and electric customers.

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