FERC Monday approved East Cheyenne Gas Storage LLC’s proposal to operate a natural gas storage facility in Northeast Colorado to serve the peak-day and load-growth needs in markets throughout the Midwest and West.

East Cheyenne, a wholly owned subsidiary of Littleton, CO-based Merchant Energy Partners LLC, plans to convert the nearly depleted West Peetz and Lewis Creek oil and gas reservoirs located about 23 miles north of Sterling in Logan County, CO, to gas storage service. The project would be constructed in two phases.

When completed, the storage facilities would have a total capacity of 29.5 Bcf, of which approximately 19.9 Bcf would be working gas capacity (11.5 Bcf within the West Peetz Field and 7.4 Bcf within the Lewis Creek Field) and 10.6 Bcf would be cushion gas, according to the order issued by the Federal Energy Regulatory Commission. The company says the initial 4 Bcf of working gas capacity will go into service by May 2011 [CP10-34].

The storage facility would have a maximum injection capability and maximum withdrawal capability of 350 MMcf/d, and would interconnect through a header system with Rockies Express Pipeline LLC and Trailblazer Pipeline.

The project is expected to provide a much needed source for seasonal, daily and intraday load management on interstate pipelines serving markets throughout the West, Midwest and eventually, the Atlantic Coast regions. It is being designed and built to offer services to customers that require storage to meet gas demand peaks that exceed production and long-haul pipeline throughput. East Cheyenne also said it hopes the facility would serve an important role in helping natural gas market participants manage pipeline imbalances and daily and seasonal price volatility.

The Commission approved East Cheyenne’s request to charge market-based rates for firm and interruptible storage, hub and wheeling services.

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