Absent a showing of market support, the Federal EnergyRegulatory Commission staff last week threatened to dismiss PetalGas Storage L.L.C.’s amended proposal in which it seeks to expandthe deliverability of its storage facilities in Mississippi.

In the amended application, which was filed in mid-February,Petal assured FERC that its new affiliate, Tennessee Gas Pipeline,had “sufficient primary firm, secondary firm and interruptiblecapacity” on its 500 Line to provide downstream delivery for all ofPetal’s existing storage volumes, as well as for the additionalvolumes that would flow from a storage expansion project that wasapproved by the Commission in March, staff said [CP00-59].

However, Southern Company, which signed up for much of Petal’sexpanded volumes, has since informed FERC that the amendedapplication doesn’t satisfy the terms and conditions of itsprecedent agreement, staff noted. Specifically, it wouldn’t provideSouthern with 700,000 MMBtu/d of firm storage deliverability intointerconnects with Southern Natural Gas, Destin Pipeline andTranscontinental Gas Pipe Line.

Southern Company’s precedent agreement was based on Petal’soriginal proposal, which called for new interconnects with thethree pipelines. But Petal later scrapped the original proposal infavor of expanding its existing interconnect with affiliateTennessee. In conjunction with Petal’s revised proposal, Tennesseesays it plans to ask FERC for authority to expand its 500 Line toaccommodate increased deliveries from Petal. It has not filed anapplication at the Commission yet. Both Petal and Tennessee areowned by El Paso Energy.

Based upon the reservations expressed by Southern Company, “itnow appears that your application is incomplete because Petal’s[amended] expansion does not meet the terms of the precedentagreement with Southern…..and therefore lacks a market showing,”wrote Daniel M. Adamson, FERC’s director of the Office of EnergyProjects, in a letter to Petal. Adamson directed Petal to respondto the Commission within five days of the April 4 letter.

Susan Parker

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