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

Houston-based Market Hub Partners, for example, is trying tosolve its salt cavern problem by working on a joint venture withUnited Salt Corp., also based in Houston, to build a salt-brineproducts plant next to its projected cavern facility in TiogaCounty, PA, a few miles from the New York border.

MHP’s subsidiary NE Hub has FERC and local permits to initiallydevelop two caverns. But, there’s a catch. “People in the (salt)industry feel the Tioga project will produce too much salt for themarket to absorb,” says Dennis Kostick, salt-industry specialistwith 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 thearea, such as Cargill and others around Watkins Glen (New York).”Brine is at a disadvantage Sutton says, “because rock salt is mucheasier to store for use on roads in the winter.” Using salt onroads is a big market in the Northeast.

If making use of the salt waste from solution mining is such aproblem, what’s in it for United Salt? “It’s a relatively smallcompany,” says USGS’ Kostick, “and we hear they would like tobecome more diversified so they can grow faster.” Making ashare-the-risk agreement with Market Hub might work, Kostick says,”if there’s enough financial incentive, such as a share of the gasstorage business.”

Thomas Siguaw, MHP project manager, would not comment on anynatural-gas storage profit-sharing possibilities with United Saltother than to say “we have a deal with United Salt to build aplant.”

“We’re worried that Northeast Hub’s Tioga brine plant plan won’tbe economical,” says Henry Brown, chief counsel for CNGTransmission. “If they can’t get rid of the brine,” Brown says,”we’re afraid that they would petition again to inject it back intothe ground and this could hurt our storage area.” NE Hub tried testinjecting brine and it didn’t work. The company then moved to thesalt-plant concept.

NE Hub is embroiled in a litigious dispute with CNG and NorthPenn Gas because the salt cavern drilling and solutioning wouldoccur beneath their existing, depleted-gas-field storage facility.The two companies say they’re worried about NE Hub’s plan to push a20-inch pipe right through their space to get to the salt depositunderneath.

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

“CNG and Penn North are claiming that the size of the drill andthe possibility of having brine re-injected into the ground woulddamage their property,” says Washington attorney David Hill whorepresents MHP, “but we think their real motivation is that theyare trying to prevent NE Hub from coming into their back yard toput up a big gas storage facility…..They have a competitivereason 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 saltcaverns to add to its existing LPG storage cavern, is suing MHP forallegedly conspiring to put him out of business.

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

Meanwhile, in the Watkins Glen area, one salt cavern has been inuse since 1996 to store natural gas, while two additions aremoving ahead in the pre-production stage. Owner Seneca LakeStorage, a subsidiary of Energy East Corp., the holding companyparent of New York State Electric and Gas, has had no regulatoryproblems 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 generalmanager, Mark Cole, “so there’s no waste problem.”

Peter Weaver

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