Saltville Gas Storage Co. LLC has filed an application with FERC asking the Commission to trim by more than 30% the certificated capacity of its gas storage field in southwestern Virginia.
In an abbreviated application filed with the Federal Energy Regulatory Commission (FERC) Sept. 28, Saltville, a subsidiary of Spectra Energy, asked the Commission to decrease its certificated capacity to 4.7 Bcf (3.0 Bcf working gas) from the 6.75 Bcf (4.79 Bcf working gas) first certified in 2004, reduce the facility's maximum daily injection rate to 180 MMcf/d from 220 MMcf/d, reduce the maximum daily withdrawal rate to 275 MMcf/d from 550 MMcf/d and remove a requirement that Saltville conduct sonar surveys every five years.
In its application, the Houston-based company said it found after construction that the facility's actual design capacity is lower than it had anticipated in its original application. The primary reason for the difference in storage capacity is the amount of brine the company originally thought could be removed from one of the salt caverns.
"Relying on old leaching records and pressure tests, it was estimated that 6 million barrels could be removed from Cavern No. 3," according to Saltville's FERC application. "The actual volume of brine removed from Cavern No. 3 was less than 3.7 million barrels." The shortfall may have been due to an overestimate of the brine left in place or an overestimate of the efficiency of debrining the irregularly shaped cavern.
The local geologic formation provides for the only salt cavern storage in an area from the Gulf Coast to northern Pennsylvania. The Saltville facility is connected to the East Tennessee Natural Gas (ETNG) pipeline system in Virginia. Unlike salt dome storage, Saltville's caverns are situated in bedded salt and the caverns are estimated to be 70% full of rubble, far more than the company had anticipated. As an alternative to sonar testing, Saltville proposed that it conduct gallery sizing surveys which will use pressure, temperature and measured flow data to determine the size and storage capacity of each gallery. Those surveys, pressure tests and wireline logging to monitor the cavern roofs for evidence of subsidence will be performed every five years beginning in 2008 if FERC approves Saltville's application.
In June 2004, Saltville, then a partnership between NUI Corp. and Duke Energy, received a certificate from FERC for operation of the high-deliverability gas storage field (see Daily GPI, June 16, 2004). At the time, FERC said the project would be "critical to the continued economic growth of the Virginia and Mid-Atlantic region and to the region's goal of improving air quality by increasing the use of clean-burning natural gas for electric generation and other industrial purposes." The storage field was already operating in Smyth and Washington counties, VA, but the company planned for it to grow in phases over several years, with an ultimate capacity of 5.8 Bcf of working gas, 220 MMcf/d of injection capability and 550 MMcf/d of deliverability. Working gas was to have grown from 2.1 Bcf in 2004 to 5.8 Bcf by this year. Daily injection capacity was to have increased from 104 MMcf to 220 MMcf and daily withdrawal capacity was to have increased from 208 MMcf to 486 MMcf.
In April 2005, Duke Energy Gas Transmission became sole owner of Saltville Gas Storage LLC through a $62 million deal with AGL Resources (see Daily GPI, April 28, 2005). Other hard assets involved in the transaction included an 8-inch diameter natural gas pipeline known as the P-25 line and the Early Grove storage field, a 1.5 Bcf depleted field storage facility in Washington and Scott counties, VA. The P-25 pipeline stretches from Saltville to Radford, VA, running parallel to ETNG. Saltville Gas Storage became a subsidiary of Spectra Energy Corp. this year when Spectra was spun off by Duke Energy (see Daily GPI, Jan. 3).
Saltville requested that FERC issue the certificate amendment by March 1, 2008, so that the company can file its next FERC-mandated rate review using a certified capacity that reflects the actual capacity of its facilities. Saltville said it plans to file an application with FERC next year to acquire, operate and maintain storage facilities currently owned and operated by Spectra Energy Early Grove Co. and Spectra Energy Virginia Pipeline Co.
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