Adding to the recent flurry of natural gas storage projects headed for Mississippi to serve the Southeast, Petal Gas Storage LLC, a subsidiary of El Paso Energy Partners LP, said Thursday that it is holding a non-binding open season for up to 5 Bcf of firm natural gas storage capacity in order to evaluate market interest in proposed plans to expand its facility in Petal, MS. The capacity is anticipated to be available for use by Jan. 1, 2004.

Petal is just one of several companies vying to add storage capacity in Mississippi. Just in the past two months, Bedminster, NJ-based NUI Corp. and Houston-based SGR Holdings LLC revealed separate salt cavern storage projects, both of which are scheduled to come on-line in late 2003. SGR’s Southern Pines Energy Center in Green County, MS, and NUI’s Richton, MS, project are expected to bring a combined 26 Bcf of gas storage to the region.

In addition, a subsidiary of Duke Energy’s Market Hub Partners (MHP) in November 2001 asked FERC for the preliminary go-ahead to develop an underground natural gas storage facility in Copiah County, MS (see NGI, Nov. 19, 2001). The new facility would have an initial storage capacity of 3.3 Bcf, about 300 MMcf/d of withdrawal capability and approximately 150 MMcf/d of injection capability. The storage capacity of the proposed facility could be expanded by an additional 6 Bcf to 9.9 Bcf. The project has a projected in-service date of Feb. 1, 2004.

“The recent announcement of several greenfield storage projects in Mississippi is evidence of the value of high-deliverability storage downstream of the hurricane belt. Petal has the existing infrastructure to bring this capacity to market in a fast, efficient manner with low environmental impact,” said Petal President Joe Averett.

The Petal open season will start at 9 a.m. CST on March 11, and run until 5 p.m on March 20. Interested parties should contact Russ Kovin at (832) 676-5659 to obtain forms to request service. Petal said that no other form of bid will be accepted. While it is seeking 10-year terms, Petal said it will consider smaller or larger terms. For bids exceeding 10 years, Petal said it will calculate present value based on cash flows for the first 10 years only.

Asked whether demand in the area could warrant more than one project going forward, NUI spokesman Chris Reardon said that it would not be a problem. “We think that even with the other project moving forward that, yes, there will be sufficient demand on the interstate pipeline system and from local power generators in the Southeast,” he said.

Speaking on the merits of the Petal expansion, Kim Wallace, an El Paso spokeswoman, said, “The market is going to determine what projects will actually be built. Our project is a good project because it’s the only one of the ones that are being proposed right now that is from an existing facility. Since it’s an expansion, we feel like we can bring it on sooner, cheaper and with less environmental impact than a greenfield project. As far as whether our project will be the only one built, I don’t know, the market will have to determine that.”

The Petal storage facility currently interconnects with Tennessee Gas Pipeline, Gulf South Pipeline and Hattiesburg Gas Storage. Petal also is planning to construct a new 59-mile bi-directional pipeline to new connections with Southern Natural, Transcontinental Gas Pipe Line and Destin Pipeline. The $94.3 million pipeline project received Federal Energy Regulatory Commission approval in late October 2001, but was found by FERC staff not to comply with certain environmental requirements. FERC staff denied Petal’s request to proceed with the construction of the line in January until the company revised its implementation plan to address the environmental concerns (see NGI, Jan. 7). Petal said that construction of the pipeline, which would serve a contract with Southern Co., is anticipated to be completed this summer.

In addition to the pipeline, Petal is seeking to build an additional 9,000 hp compressor station near Heidelberg, MS; 0.3 miles of bi-directional 36-inch pipeline from a tie-in point on the Transco system to the proposed compressor station near Heidelberg; and new metering facilities.

In mid-January, SG Resources Mississippi LLC, a wholly-owned subsidiary of SGR Holdings LLC, announced plans to build a high-deliverability salt cavern storage facility, designed to provide 16 Bcf of storage in two caverns, each with 8 Bcf of capacity (see NGI, Jan. 21). The Southern Pines Energy Center will have direct interconnects to nine major pipelines, including the Williams/Transco system, the Destin pipeline, the Florida Gas Transmission System, and Gulf South and its proposed Gulf Pine Pipelines. The 80-acre site will accommodate three additional caverns to support future growth in demand. The company said it anticipates bringing the first storage capacity on line in the fourth quarter of 2003.

Likewise, NUI Energy Brokers (NUIEB), an affiliate of NUI Corp., said it plans to develop a three-well salt dome storage facility near Richton that would have a working gas capacity of approximately 10 Bcf. The Richton site is being examined because it is also located next to a number of major interstate pipelines, including Destin Pipeline and its connections to Williams Gas Pipeline-Transco, Florida Gas Transmission, Gulf South Pipeline, Tennessee Natural Gas, Southern Natural Gas and Gulfstream Pipeline.

Last Monday, SGR posted its pro-forma tariff for its Southern Pines Energy Center. The company is conducting an open season for firm storage services for the first 12 Bcf of storage capacity from Feb. 4 through today (March 4).

The tariff is expected to be filed with FERC during the second quarter of 2002. It is subject to change upon filing and per FERC order revising and approving the tariff. For information about the Southern Pines project, the pro-forma tariff, or the open season, visit SGR’s website www.sgr-holdings.com. or contact A.J. Clark at (713) 914-8188.

NUIEB said last week that it has acquired options on the land and mineral rights for property in Perry County, MS to develop into a natural gas storage facility to help serve the Southeast United States. The first storage cavern is tentatively scheduled to be operational by the end of the third quarter of 2003. The company said it will also construct a 14-mile pipeline to Destin.

“We are having conversations with pipelines and end-users in an exploratory fashion,” said Reardon. “At this time, we have not worked out any specific details or timelines, but…we do anticipate at some point that we would have an open season.”

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