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Arizona Legislature Fails to Pass Gas Storage Bill

July 20, 2009
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The latest proposal for developing the first commercial-scale natural gas storage in Arizona failed to get help from the legislature before it adjourned early this month. A House-passed bill (HB 2352) would have allowed water injection to clear out shallower salt caverns for eventual underground gas storage, but the bill failed to make it to the Senate floor.

Privately held Multifuels LP, which is based in Houston, hoped to develop a storage facility in caverns southeast of Phoenix near Eloy, AZ. The company was seeking state legislation to overcome its inability to get a permit from the Arizona Department of Environmental Quality.

As proposed, HB 2352 would have turned over authority of the proposed storage project injection wells to the U.S. Environmental Protection Agency (EPA) from the state environmental quality agency.

Dependent on gas imports from the Rockies, neighboring New Mexico and Texas, Arizona has been searching for gas storage for a number of years, and industry giants such as Chevron Corp. and El Paso Corp. have proposed projects in recent years (see NGI, May 18). The Arizona Corporation Commission (ACC) has been pushing the industry to develop storage in the state for the past six years, and last November El Paso held a binding open season for a 2 Bcf facility.

Multifuels and its supporters argued that their proposed storage in the Eloy area would be strategically placed to help in both the reliability and price of natural gas, and Phoenix-based Salt River Project and a Canadian company indicated interest in developing multiple new gas-fired generation plants in the greater Phoenix area.

Environmental groups, however, opposed what they called a legislative "end run" around the state environmental department. Members of the local chapter of the Sierra Club contend there was no attempt to get a waiver from the environmental agency, which would have required scientific review of the plans for the injection wells.

With a new administration in Arizona, Multifuels representatives indicated they may go back for a waiver since the new head of the environmental agency has indicated more of a willingness to consider the waiver the company needs.

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