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Western Hub Adding Storage Fields in Texas, S. California

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 gas storage.

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 Northeast.

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.

Rocco Canonica

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