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Colorado Storage Project Bites Dust, Cites Tight Capital/Credit Market

In an unusual move, Blue Sky Gas Storage LLC has declined a certificate from the Federal Energy Regulatory Commission to construct and operate a natural gas storage field and related pipelines in Colorado, citing limited access to capital and credit to pursue the project.

"Blue Sky would like to thank FERC and its staff for issuing the certificate as requested. Unfortunately during [the] time period" between filing the application in June and the agency's approval of the storage project in December "access to both capital and credit has continued to contract, and our efforts to find an investor that could provide necessary injection of capital has been unsuccessful" (see NGI, June 15, 2009, Dec. 14, 2009).

"For that reason Blue Sky will not be able to go forward with the project and we must respectfully decline to accept the certificate issued on Dec. 10," Blue Sky, a subsidiary of Linear Energy Holdings LLC in Houston, wrote in a letter to the Commission Tuesday [CP09-428].

The facility was to have a total capacity of nearly 6.5 Bcf (4.4 Bcf of working gas and 2.1 Bcf of cushion gas) to serve Rockies gas producers. The facility had been designed to accommodate a minimum of two storage cycles per year and would have had a maximum injection and withdrawal rate of 100 MMcf/d. Start-up was anticipated in the first quarter of 2011.

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