Avista Corp. and PG&E Gas Transmission-Northwest (PG&EGT-NW) are inching closer to adding a new gas storage field in thestorage-poor Pacific Northwest region and have petitioned FERC foran exemption from Section 7 certificate requirements in order tofurther test the site.

Since announcing the proposed Columbia Hills storage project last spring, the two companies obtained leases and drilling permits from the Bureau of Land Management and drilled two wells to test the layered basalt geology at the Benton County aquifer (see NGI, April 5, 1999).

“The results obtained from drilling Well No. 1 revealed thatthere are zones that warrant additional testing for potentialnatural gas storage,” the company told FERC. As a result, theyformed a joint venture called Stanfield Hub Services LLC. PG&EGT-NW will remain project manager and will continue to manageproposed testing and drilling activities. But the company needs anexemption from FERC to continue feasibility testing pending adetermination on whether to proceed with the project. Testing willrequire drilling at least six more wells and conductinghydrogeologic and water chemistry testing on the additional wells.If the tests are successful, the company intends to apply to theCommission for a Section 7c certificate.

“The public interest is plainly served by permitting LLC toconduct its preliminary testing of the site in the temporary mannerproposed in this petition. LLC is proposing to develop asignificant new gas infrastructure facility to serve the growingPacific Northwest market, using a new storage technology. Withoutconducting the preliminary testing and drilling activities, LLCwill have no basis for an informed business decision aboutdeveloping the site and the public could lose the benefits of havea new storage site developed,” the company told FERC. Because theactivities may yield wells that could later be incorporated into ajurisdictional storage facility, the company believes it isappropriate to seek a “temporary acts or operations” exemption.

The exemption requested is consistent with Commission precedent,the company said, referring to Commission actions on other storageprojects involving Avoca Natural Gas Storage, Central New York Oil& Gas and others.

The storage project if built would be located in Washingtonacross the border from the Stanfield Hub in Oregon, where theinterstate pipelines of PG&E GT-NW and Williams (NorthwestPipeline) connect. Despite the desperate need for gas storage inthe region, unfavorable geology has left the market with only twoother facilities within several hundred miles, both of whichrecently underwent expansions.

Avista is part owner with Williams of the Jackson Prairieunderground storage facility in western Washington, which recentlywas expanded to 18 Bcf of working gas capacity from 15 Bcf and to850 MMcf/d of deliverability from 550 MMcf/d. The only otherstorage facility in the region is Northwest Natural Gas’s Mist (OR)facility 50 miles northwest of Portland. Mist also rolled out thefirst part of an eight-year, $122 million expansion last year. Thefirst phase increased working gas capacity at Mist to 8.5 Bcf fromonly 6.5 Bcf and raised deliverability to 125 MMcf/d from 80MMcf/d.

But PG&E GT and Avista also may face some additional storagecompetition in the region in the near future. Western HubProperties LLC, which is developing the Lodi Gas Storage projectnear Lodi, CA, as well as another storage facility in Bakersfield,CA, is searching for locations in the Pacific Northwest to developnew high-deliverability gas storage hubs. The company still has notannounced any of locations, however.

Rocco Canonica

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