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FERC OKs Amended Petal Storage Project

FERC OKs Amended Petal Storage Project

FERC last week gave Petal Gas Storage LLC. the go-ahead to expand an existing interconnect between its storage cavern facilities in Mississippi and affiliate Tennessee Gas Pipeline, despite strong objections from shippers that the company's project was an overt display of affiliate preference.

Specifically, Petal was awarded a certificate to build a 5.5 mile, 36-inch diameter storage header loop, add 20,000 horsepower of new compression and associated facilities within or adjacent to its storage facilities in Forrest County, MS.

Petal sought permission to expand its interconnect with Tennessee's 500 Line in an amended application that it filed last February [CP00-59-001]. The revised proposal nixed the storage company's initial plans to build facilities to interconnect with Transcontinental Gas Pipe Line Corp., Southern Natural Gas and Destin Pipeline in favor of the expanded interconnect with Tennessee, which prompted shippers to accuse Petal of affiliate favoritism and exerting market power over storage in the Gulf Coast region.

El Paso Energy, which owns Tennessee, acquired Crystal Gas Storage Inc., Petal's parent company, last January.

But FERC didn't share shippers' concerns. "While the deletion of the proposed interconnects [in the initial application] abrogates Petal's accessibility by shippers on Destin, Sonat and Transco, there are numerous other [storage] alternatives available to those shippers in the production area," the order said. It noted there are 47 storage facilities in the Gulf Coast from which shippers can choose, with an existing working gas capacity of 658,204 MMcf/d and maximum deliverability at 18,915 MMcf/d.

There was nothing in Petal's amended proposal to justify withdrawal of the market-based rates for storage services that FERC previously had awarded the company, the Commission said. Petal can charge market-based rates "provided [it], its parent company (Crystal) and El Paso Energy continue to operate their storage facilities independently." But Petal's market-based rate authority will be subject to periodic re-examination in the event it constructs new storage facilities or another affiliate enters the storage or transportation market in the Gulf production region, the order noted.

Petal sought to expand its deliverability on Tennessee when FERC approved its proposal to expand the total storage capacity of its Mississippi caverns by 5.4 Bcf and working gas capacity by 4.8 Tcf to meet the growing demand for storage service by electric generation facilities in the Southeast. Southern Company Services had signed up for much of it, executing a 20-year agreement for 7 Bcf of firm storage capacity.

Susan Parker

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