MoBay Storage Hub LLC, an affiliate of Falcon Gas Storage Co. Inc., signed a gas storage lease with the State of Alabama that covers more than 24,000 acres of state-owned lands, clearing the way for construction of the MoBay Storage Hub to start this spring, the company said last Wednesday.

The company was awarded the lease last month (see NGI, Jan. 14).

The target in-service date for the MoBay project, located in Mobile County, AL, is October 2009. MoBay will develop the project in phases. The first phase will convert the largest of three depleted gas reservoirs into a 50 Bcf high-deliverability, multi-cycle storage facility with 1 Bcf/d of withdrawal and injection capacity. The second phase will develop the remaining two reservoirs. Both phases are covered by the storage lease with the state and MoBay's FERC certificate.

The MoBay Storage Hub received authorization from the Federal Energy Regulatory Commission in December 2006 to build and operate the project under Section 7c of the Natural Gas Act. U.S. Army Corps of Engineers permits authorizing construction of the facility were issued in 2007, as were air and water quality permits from the Alabama Department of Environmental Management. Long-lead procurement items, including more than 38,000 hp of compression and 17 miles of 36-inch diameter pipe, have been acquired.

The facility will interconnect with up to seven pipelines and natural gas processing facilities, including Gulfstream, Transco (Zone 4A), Gulf South (Zone 4) and Florida Gas Transmission (Zone 3). Additional interconnects are planned with the proposed Southeast Supply Header, Williams Processing, Chandeleur, and other interstate pipelines and processing systems. All of these interconnects are within one mile of the main compressor station. MoBay is located less than 25 miles from the planned Gulf LNG Clean Energy Project and the proposed ChevronTexaco LNG facility in Pascagoula, MS.

"MoBay will triple the underground storage capacity in Alabama and substantially increase energy reliability for the entire Southeast region," said MoBay COO Edmund Knolle. "We expect MoBay to create a major new market center for natural gas in the eastern Gulf Coast region, balancing supplies from unconventional production and LNG with growing weather-driven gas load in the Southeast.

"Since MoBay received its FERC Certificate," he added, "over 5,500 MW of new coal-fired generation in the Southeast has been canceled. Natural gas will be required to fill the void. MoBay's location, large working gas capacity and high injection rates will allow interstate shippers to quickly store large amounts of off-peak gas at a market center directly connected to over 6 Bcf of takeaway capacity into peninsular Florida, the Southeast and Northeast U.S. markets."

MoBay has executed binding precedent agreements with nine shippers for 29.4 Bcf of working gas capacity and plans to hold an open season in March for the remaining Phase I capacity.

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