Sempra Energy subsidiary Sempra U.S. Gas & Power LLC has received authorization from the Federal Energy Regulatory Commission to place a second underground natural gas storage cavern into service at its Mississippi Hub Storage facility located in Simpson County, MS.

The cavern will serve the growing Southeast natural gas market with operational interconnections to three major interstate gas pipelines: SONAT, Transco and Southeast Supply Header (see Daily GPI, Sept. 11, 2011).

The second cavern's 7.5 Bcf capacity expands the facility's total working gas storage capacity to 15 Bcf. The facility's location provides access to traditional gas supplies in the Gulf of Mexico and along the Gulf Coast, as well as shale gas production and liquefied natural gas imports, the company said. The three pipeline connections provide bi-directional access to major markets throughout the Southeast and Mid-Atlantic regions.

"The additional capacity at Mississippi Hub Storage represents the next step in our strategy to expand our footprint in the rapidly evolving natural gas market in the Southeast," said Michael Gallagher, regional president of natural gas for Sempra U.S. Gas & Power. "As more natural gas supply comes online and liquefaction terminals move forward, customer demand for additional underground storage at strategic pipeline hubs like Mississippi Hub Storage will continue to grow."

Gallagher said the injection capacity currently available at Mississippi Hub Storage is fully contracted and additional injection capacity will become available once the dewatering process at the new cavern is complete. The facility has injection capability of 450 MMcf/d and a withdrawal capability of 1,200 MMcf/d.

While the facility is permitted for four storage caverns holding up to 30 Bcf of working gas, the company said it expects to complete construction on a third 7.5 Bcf cavern in 2013, which will expand the site's storage capacity to 22.5 Bcf.

Sempra U.S. Gas & Power also owns and operates 15.5 Bcf of underground natural gas storage at Bay Gas Storage near Mobile, AL, along with two natural gas distribution utilities and long-distance gas pipelines.

Last fall, Sempra Energy CFO Mark Snell, who has since become president of the company, said that because of low wholesale natural gas prices and low volatility, storage doesn't carry as much value as it did three or four years ago. As a result he said the company "cut back the total capacity we expect" at Mississippi Hub and Bay Gas.

"We're expanding our facilities [Bay Gas and Mississippi Hub] on a fairly cost-effective basis, but we're not putting in lots of compression, nor are we expanding beyond the [salt dome] caverns we are currently working on," Snell said in September of 2011 (see Daily GPI, Sept. 9, 2011). "We have been able to lower our costs of the expansion to about $8 million/Bcf, so it is quite inexpensive expansion."

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