The U.S. Army Corps of Engineers issued a final permit to MoBay Storage Hub LLC authorizing construction of its 50 Bcf MoBay gas storage facility under Section 404 of the Clean Water Act and Section 10 of the Rivers and Harbors Act.

Located in Mobile County, AL, the project of Falcon Gas Storage Co. Inc. will provide storage and hub services to local and interstate gas customers, including gas utilities, electric generators and industrial end-users.

The MoBay Storage Hub received authorization from the Federal Energy Regulatory Commission (FERC) in December 2006 to build and operate the project under Section 7c of the Natural Gas Act (see Daily GPI, Jan. 3). MoBay filed its application with FERC one year ago (see Daily GPI, June 23, 2006).

As a FERC-jurisdictional, interstate gas storage facility, MoBay will interconnect with up to eight interstate pipelines and gas processing facilities, tripling the underground storage capacity in Alabama and substantially increasing energy reliability for the state and the entire Southeast region, Falcon said. Additional storage capacity in the region will help moderate price shocks caused by sudden increases in high-demand areas, such as Florida, and weather-related supply disruptions.

"Natural gas demand in the Southeast is growing rapidly," said Edmund Knolle, MoBay's COO. "Regional gains in population growth and manufacturing activity are expected to significantly increase natural gas demand in Alabama, Georgia, Florida and the Carolinas over the next two decades. The MoBay Storage Hub will give large natural gas end users in these states an important tool to manage their daily and seasonal fuel requirements and reduce the impact of price spikes on consumers."

The MoBay hub is expected to complete construction and start service by October 2008.

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