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Salt Removal Stalls NE Storage

Salt Removal Stalls NE Storage

Once touted as a quick fix for peak demand in the Northeast, salt cavern storage has stumbled over the problem of what do with the salt that is removed to make the cavern, which appears to be about as popular as nuclear waste. At this point one project has been delayed and two others appear to have stalled.

Houston-based Market Hub Partners, for example, is trying to solve its salt cavern problem by working on a joint venture with United Salt Corp., also based in Houston, to build a salt-brine products plant next to its projected cavern facility in Tioga County, PA, a few miles from the New York border.

MHP's subsidiary NE Hub has FERC and local permits to initially develop two caverns. But, there's a catch. "People in the (salt) industry feel the Tioga project will produce too much salt for the market to absorb," says Dennis Kostick, salt-industry specialist with the U.S. Geological Survey in Washington.

"One of the problems," United Salt president Dan Sutton admits, "is pitting a brine company against rock-salt competition in the area, such as Cargill and others around Watkins Glen (New York)." Brine is at a disadvantage Sutton says, "because rock salt is much easier to store for use on roads in the winter." Using salt on roads is a big market in the Northeast.

If making use of the salt waste from solution mining is such a problem, what's in it for United Salt? "It's a relatively small company," says USGS' Kostick, "and we hear they would like to become more diversified so they can grow faster." Making a share-the-risk agreement with Market Hub might work, Kostick says, "if there's enough financial incentive, such as a share of the gas storage business."

Thomas Siguaw, MHP project manager, would not comment on any natural-gas storage profit-sharing possibilities with United Salt other than to say "we have a deal with United Salt to build a plant."

"We're worried that Northeast Hub's Tioga brine plant plan won't be economical," says Henry Brown, chief counsel for CNG Transmission. "If they can't get rid of the brine," Brown says, "we're afraid that they would petition again to inject it back into the ground and this could hurt our storage area." NE Hub tried test injecting brine and it didn't work. The company then moved to the salt-plant concept.

NE Hub is embroiled in a litigious dispute with CNG and North Penn Gas because the salt cavern drilling and solutioning would occur beneath their existing, depleted-gas-field storage facility. The two companies say they're worried about NE Hub's plan to push a 20-inch pipe right through their space to get to the salt deposit underneath.

FERC has attached conditions to NE Hub's permit, stating that no brine can be re-injected back into the ground and no construction or leaching activities can start until United Salt gets the necessary permits for the brine evaporation plant.

"CNG and Penn North are claiming that the size of the drill and the possibility of having brine re-injected into the ground would damage their property," says Washington attorney David Hill who represents MHP, "but we think their real motivation is that they are trying to prevent NE Hub from coming into their back yard to put up a big gas storage facility.....They have a competitive reason to keep out independent storage projects."

Work on two other salt cavern projects in Bath and Avoca, NY, has halted. Robert Weinberg, president of Bath Petroleum Storage, Inc., a company that has been petitioning to create new salt caverns to add to its existing LPG storage cavern, is suing MHP for allegedly conspiring to put him out of business.

Avoca was stopped in its tracks after attempts to re-inject brine failed, and a plan to carry the brine waste, via pipeline, to a salt plant in Watkins Glen was nixed. The company went into bankruptcy and a new company, Northeastern Gas Caverns, recently purchased all the salt drilling rights and equipment for $8 million, plus some debt assumption, promising to revive the project. Avoca originally had been backed by Dynegy, Bechtel and PG&E's US Generating, and Equitable Resources to the tune of $80 million.

Meanwhile, in the Watkins Glen area, one salt cavern has been in use since 1996 to store natural gas, while two additions are moving ahead in the pre-production stage. Owner Seneca Lake Storage, a subsidiary of Energy East Corp., the holding company parent of New York State Electric and Gas, has had no regulatory problems or harassment from competitors.

How did this happen? "It's because our caverns (leased from U.S. Salt) have already been mined for salt," says SLSI's general manager, Mark Cole, "so there's no waste problem."

Peter Weaver

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