Western Hub Adding Storage Fields in Texas, S. California
It's been a month since Western Hub Properties LLC received a regulatory
green light on its Lodi Gas Storage Project in Northern California, but
the company already is preparing to launch two more storage fields and
has several others on the way.
Western Hub said last week that it is about to announce a high-deliverability
storage project in Bakersfield, CA, near Wheeler Ridge, and is moving forward
on a storage facility in Live Oak and Karnes Counties, TX, near San Antonio.
Other projects in the Pacific Northwest, the Northeast and potentially
other regions could be coming soon.
"We are aggressively pursuing storage projects throughout the country,"
said spokesman Jim Fossum. "We have three [projects] that are in the
developmental stages, one other that's hopefully about to reach that level
and several others that are in the due diligence study phase. The Lodi
project should be on line next spring. The [Texas] project should be on
line next spring as well, and the next project (in southern California)
should be about nine months behind that."
The rights to the Texas facility were purchased from Atkinson Gas Storage,
which had been planning to develop the project for several years. Through
its subsidiary CenTex Market Center LP, Western Hub will convert the Atkinson
field, a depleted gas reservoir, into high-deliverability, multi-cycle
The facility's initial phase will have a working gas capacity of 12
Bcf with an injection capability of 450 MMcf/d and a withdrawal capability
of 250 MMcf/d. The field potentially could be expanded to about 30 Bcf
of working gas capacity. Service is expected to begin in May 2001.
The Atkinson project will be used to serve the growing gas-fired power
generation market in South Texas as well as rapid residential, commercial
and industrial growth in the region, said Western Hub President Tom Dill.
"The CenTex project is ideally situated to provide market area storage
services to the growing San Antonio/Austin corridor," he said. "The
additional gas-fired generation being built in this area, combined with
the projected increase in volatility of gas and electricity prices, demands
high-deliverability natural gas storage."
CenTex anticipates being directly connected to City Public Service of
San Antonio's city gate as well as the intrastate grid via Houston Pipe
Line and PG&E Gas Transmission, Texas (which is being sold to El Paso
Energy). There are no gas storage facilities in Central or South Texas,
noted Western Hub Vice President Kevin O'Toole.
"We thought this would be a good growth area for us," said
O'Toole. "There's quite a bit of power generation going in. Panda
[Energy] has a project around Austin. Calpine has some up there. The City
of San Antonio just brought on line a 500 MW unit. And there have been
several other recent announcements. We feel like there will be pretty good
demand for high-deliverability storage in this area."
The CenTex project should move forward rapidly, he added. "The
project was pretty well packaged. [Atkinson Gas Storage], which held all
the permits, had been looking at developing a storage field down there
for quite some time and had a lot of the leases and permits. We have a
lot fewer hurdles to overcome than on other recent projects." The
project already has a storage permit from the Texas Railroad Commission.
Western Hub also announced that its Lodi project, which is under development
in northern California, received certification from the California Public
Utilities Commission in late May (see NGI,
May 22). The project will offer 9 Bcf of capacity, 300 MMcf/d of injection
and withdrawal capability, with receipt and delivery points on Pacific
Gas & Electric's pipeline system.
Meanwhile, in the next week or two the company will announce a merchant
storage project in the Wheeler Ridge area of California in close proximity
to each of the four major gas pipelines in the state and to several proposed
gas-fired merchant power plants --- one of them, PG&E Corp.'s La Paloma
plant, which began construction May 17, will be the state's largest merchant
plant (1,048 MW).
Western Hub believes its high-delivery, flexible gas storage services
will be ideally suited to serve the emerging independent power generation
industry. "High deliverability storage is a surrogate to long-haul
pipeline capacity," said O'Toole. "Based on the environmental
and landowner issues, the expansion or new construction of long-haul pipeline
capacity can to a great degree be replaced by a high-deliverability storage
field in a market area." O'Toole said Western Hub has its sights on
projects in many other regions, including the Pacific Northwest and the
Western Hub is owned by Haddington Energy Partners and Haddington/Chase
Energy Partners, whose general and limited partners consist of Haddington
Ventures, Chase Capital Partners, Travelers Insurance, Prudential Insurance,
and Indiana Energy.