Interest Grows for Merchant Gas Storage in Southern California

With a second merchant underground storage field set to open in the northern half of the state later this year and an existing one in the north proposing a sizable expansion, the push for at least one, if not two, new storage fields in Southern California has heated up this summer, according to industry observers.

The focus of everyone's attention is Wheeler Ridge in the southern end of the giant San Joaquin Valley south of Bakersfield, where four major interstate and intrastate transmission pipelines traverse, and where a sizable gas load for new electric generation plants is taking shape.

Prospective developer/operators include the two merchant firms with the new fields in the north -- Texas-based Western Hub Properties, which is building the Lodi Underground Storage Project in an abandoned gas field south of Sacramento, and Canadian-based Alberta Energy Co. (AEC), operator/owner of Wild Goose Underground Storage north of Sacramento with plans already outlined to greatly expand the facility. The California Public Utilities Commission will hold a pre-hearing conference on Wednesday in San Francisco on Wild Goose's extensive expansion plans.

"They are both looking for something in the Wheeler Ridge area," said Bill Wood, the natural gas strategist for the California Energy Commission. "It will probably be next year before we find out what they are looking at. I thought they were looking at Ten Section (a one-time Southern California Gas Co. proposed storage facility), but they say that is too big and has too many holes in it. So, I assume they are looking at something different."

However, AEC's Calgary-based Paul Amirault, business development vice president for the Wild Goose project, said Tuesday that his company is not pursuing other sites while it is working on what could be a two- to three-year expansion, including an interconnection with Pacific Gas and Electric Co.'s transmission backbone system through a new 25-mile, 30- or 36-inch-diameter pipeline.

Unlike the original development of the facility, the state's first merchant underground storage project, the expansion will require a full-blown environmental assessment as AEC seeks to significantly expand the facility's injection and withdrawal rates (450 MMcf/d injection from the current 80 MMcf/d; and 700 MMcf/d withdrawal from the current 200 MMcf/d capability).

Western Hub's California operations manager, Jim Fossum, said last Monday that his firm has already locked up its proposed site near Wheeler and will be filing with the CPUC to develop the site next spring. He also noted that the Lodi project, which was delayed for more than a year in the permitting process, is set to open by Nov. 1.

"We have most of the 38 miles of pipeline completed, we have some of the wells completed and the compressor station is well under way," Fossum said. "Right now we have so much work on the Lodi project, the other projects that we are working on are on hold."

Following additional geological work at its proposed new site in the south, Fossum said the project has been identified as do-able, but he would not divulge the site's exact location yet. "We've looked at everything and this is clearly the best prospect," he said, estimating it would be two years, at minimum, from the time of the CPUC filing until the facility is operational.

Industry stakeholders agree that storage in the Wheeler Ridge area is badly needed, and the challenge is just finding the right geology for a market-based storage field.

"I've talked to Kern River and they have said they really need storage at that end of their pipeline to allow more flexibility for moving gas through their system," the energy commission's Wood said. "They do have surging in their system, and the only surging they can take care of is whatever they put in linepack."

"Storage is needed down there, and if it goes in, it is an ideal location because it can take care of enhanced oil operations and can feed into both PG&E and SoCalGas. It is really a great location for one or more storage fields. "They have lots of fields to look at, but it is a matter of finding one the right size with the right characteristics that won't need a lot of work and won't leak," he said.

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