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California Still Hungry for More Gas Storage

After siting several independent underground natural gas storage facilities during the past decade, California's thirst for storage still has not been quenched, particularly in the northern half of the state. Thus, it is not surprising that a veteran associated with the earlier projects has a new one, but the proposed urban location is a bit eye-popping -- in the middle of the state capital's burgeoning population.

The California Public Utilities Commission (CPUC) review, including the environmental assessment, is still incomplete, but Sacramento Natural Gas Storage has a contract with the Sacramento Municipal Utility District (SMUD) that relies on a lot of gas-fired generation. SMUD needs some of the space in the proposed 7.5 Bcf underground storage facility in the old Florin Gas Field under what is now a park and industrialized area in the south portion of the state capital.

Unlike the other independent storage projects that were developed under undeveloped former gas field properties, Sacramento Storage is having to obtain leases from hundreds of residential and other property owners. While many have signed up, there is still organized opposition in the community as residents raise concerns about safety and environmental issues.

Jim Fossum, the project's president and a former project manager for Texas-based Western Hub Properties, which built the Lodi Underground Storage Project in an abandoned gas field south of Sacramento, is facing skeptical residents in the area who have raised concerns based on the 800-page draft environmental impact report (EIR) that is circulating on the project.

The Sacramento Bee reported on the EIR's citing of "significant and unavoidable" impact from a related connecting natural gas pipeline segment and potential "leakage" of gas supplies into groundwater aquifers existing above the gas caverns.

The EIR said most impacts can be mitigated, the Bee reported, and there are alternatives for sites and interconnecting pipelines. Nevertheless, residents living on a portion of the surface of the proposed 379-acre underground storage facility are voicing concerns.

Proponents argue that there are about a half-dozen similar gas storage operations in depleted reservoirs that happen to be located under existing urban areas. As part of the EIR review process Sacramento Natural Gas Storage told the Bee it plans to highlight these other areas.

So far, SMUD is the only customer signed up, but the project backers said they are talking to a number of other prospective customers.

Interest in additional storage outside of what the state's two major private-sector utilities provide has been high in California for more than a decade, going back to the late 1990s when two merchant projects, Wild Goose and Lodi, were developed in Northern California and connected to Pacific Gas and Electric Co.'s backbone transmission pipeline system (see Daily GPI, Aug. 8, 2001).

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