MHP Moves Forward on Mississippi Salt Cavern

After several ownership changes and years of consideration, Market Hub Partners (MHP) is finally preparing its proposed salt cavern gas storage project in Copiah, MS, for service. The Duke Energy subsidiary launched a 30-day open season last week to test market interest in the project, which initially would provide 3 Bcf of working capacity and about 300 MMcf/d of deliverability on Texas Eastern and several other Gulf Coast pipes starting in spring 2004.

"Market Hub Partners continues to enhance Duke Energy's interstate pipeline system, enhancements that keep industries working and economies growing," said Gregory Rizzo, president of MHP and vice president of marketing for Duke Energy Gas Transmission.

Copiah, formerly called MS-1, has been on the drawing board since the early 1990s. Initially, MHP discussed developing the project as a regulated asset as part of Duke's Texas Eastern Transmission System, said MHP's Dave Nightingale. "There was concern about loss of production offshore at the time. We just never were able to convince ourselves that it was a doable project. It kind of was shelved for a couple years, and then we got actively involved again about two years ago. It really has been stepped up because of its proximity to Tetco and some of the other pipelines that have capacity concerns in the Southeast." Duke's purchase of MHP last August also apparently stepped up the pace of development.

Duke bought MHP from NiSource last August for $400 million and immediately became one of the largest owners of salt cavern gas storage in the nation with about 23 Bcf of existing working capacity and another 12 Bcf in development. MHP also owns Moss Bluff in Liberty County, TX, Egan in Acadia Parish, LA, (see NGI, Jan. 22) and the proposed Northeast Hub in Tioga County, PA (Tioga is being held up by negotiations with other local storage and pipeline operators, particularly Dominion Transmission).

Nightingale said MHP intends to follow the same business plan with Copiah that it did with Moss Bluff and Egan. "We want to develop merchant storage, and that merchant storage, connected to multiple pipelines, gives us the opportunity to maximize the optionality for our customers so they can utilize it in whatever way they want. They will buy it for different reasons. We'll have marketers, LDCs, pipelines and power generators. Because of that optionality we will have a large customer base. We think we're going to have a whole new set of customers by moving into Mississippi and the Southeast market."

The Copiah cavern would have a strategic location in southwest Mississippi near several possible natural gas pipeline interconnects, which could provide customers with significant flexibility for hourly nomination swings. Interstate pipelines near Copiah include Texas Eastern (near Union Church, MS), Transco, Sonat and Gulf South Pipeline (formerly known as Koch Gateway). Duke Energy Field Services' AIM pipeline is nearby as well. Depending on which pipeline a customer needs service, Copiah's rates will range between $2/Dth per year for a 10-cycle service and $3.35/Dth.

"We are planning and developing new facilities and infrastructure to serve single customers or entire regions," said Rizzo. "Market Hub Partners' salt caverns complement Duke Energy's traditional seasonal storage fields. The development of the Copiah facility will greatly enhance our ability to meet the time-sensitive injection and withdrawal requirements of today's storage customers."

Laura McGuire, managing director of MHP, said planning and development should go "fairly quickly" because MHP owns the land and the salt rights there. "We're real excited about it. It seems to be a really good time to go out into the marketplace with salt dome storage. There are a lot of advantages to having this [type of facility]." The open season ends April 25. For details contact McGuire at (713) 627-4332.

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