Dominion, which already owns and operates an underground natural gas storage system with about 960 Bcf of capacity, Tuesday announced the Storage Factory Project, which would expand its capacity by up to 50 Bcf. The operation would serve customers in the Northeast and Mid-Atlantic areas.

The first phase would add 11.2 Bcf of capacity. Initial construction is scheduled for 2009 when work will begin on two salt caverns to be added to the existing fleet of depleted reservoirs. The salt caverns are in Tioga County, PA.

According to Dominion, the Storage Factory Project would integrate the high deliverability of storage in salt formations with the large capacity of depleted reservoir storage.

"The future of natural gas storage is here," said CEO Thomas F. Farrell II. "The blending of capacity from traditional depleted reservoir storage and deliverability from salt caverns represents an exciting growth opportunity for Dominion's storage assets. Salt cavern storage is common in the producing area, but we are building this infrastructure close to the market area, where its advantages -- high-deliverability, flexibility and expandability -- will bring needed supplies to the market quickly, especially during peak weather conditions."

Dominion will leach salt out of deep underground formations to form caverns where gas may be stored at pressures typically higher than depleted gas storage fields common in the Northeast market area. Gas can be repeatedly injected and withdrawn from the caverns, bringing more flexibility to the system in the winter. The salt cavern storage will be coupled with additional, lower-deliverability storage facilities to provide a flexible, reliable mix of gas storage service offerings, the company said.

Dominion will hold an open season for the project beginning at 8 a.m. EDT Monday and concluding at 5 p.m. July 17. The project is subject to approval by the Federal Energy Regulatory Commission. The anticipated in-service date for the first two caverns is 2014.

"The demand for clean natural gas is growing throughout the Northeast and the Mid-Atlantic," said Dominion Energy CEO Paul Koonce. "We are calling it the Storage Factory Project because we can construct new storage facilities as the demand for natural gas grows."

The plans calls for a compressor station for injection and withdrawal, as well as pipelines needed to move the natural gas to market. Dominion expects the project will create 75-100 full-time positions in north central Pennsylvania, with an additional 200 construction jobs during the first two years. Depending on how many caverns are constructed, the project would cost $500-700 million.

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