Following up on an already busy year, Falcon Gas Storage Co. Inc. has teamed up with Emera Inc. to form Greyhawk Gas Storage Company LLC, a joint venture to acquire, develop, own and operate high-deliverability, multi-cycle (HDMC) natural gas storage facilities in the Northeastern United States.

Greyhawk said Monday that in addition to developing new HDMC storage facilities, it expects to joint venture with existing owners of gas storage capacity who want to increase the amount of multi-cycle storage capacity on their transmission systems without incurring the capital cost and development risk associated with such projects.

“Significantly greater amounts of swing capacity will be required to balance new base load import volumes with the hourly fluctuations of incremental power generation demand,” said Edmund A. Knolle, executive vice president of Falcon Gas Storage. “Allowing variable load customers to simply use line pack to balance base load supply with hourly demand will become increasingly difficult for gas transmission companies to justify, both economically and operationally. Over-pull penalties will not solve operational problems. New storage capacity will have to be developed in order to balance the constant flow rate of the growing base load supply with the volatile hourly fuel needs of incremental demand.”

Wayne Rousch, senior vice president of Emera, said, “Emera is focused on expanding its energy infrastructure portfolio in the northeast… Of course, gas storage also complements our investments in the Sable Offshore Energy Project and Maritimes & Northeast Pipeline.” Emera, based in Halifax, NS, has a 12.5% stake in the pipeline. Its principal operating subsidiary, Nova Scotia Power, is the primary electricity company in the province. Emera is in the process of gaining final regulatory approval for the acquisition of all of the common shares of Bangor Hydro Electric Company in Maine.

Under the terms of the agreement, Falcon contributed 100% of its Northeast HDMC gas storage prospects to the joint venture and will serve as manager of the company through its wholly-owned subsidiary, Falcon Northeast Holdings LLC.

The formation of Greyhawk adds to an already busy year for Falcon. Recognizing the need for more high-deliverability storage to support the rapid growth of gas-fired power generation in Texas, Falcon in April acquired the Hill-Lake natural gas storage facility from TXU Lone Star Pipeline (see Daily GPI, April 4). Falcon then turned the storage plant from a single-cycle facility serving the Abilene market during the winter heating season, to a high-deliverability operation attached to the Texas gas pipeline grid.

In July, Falcon acquired the right-of-way for the construction of a 17-mile, 20-inch diameter natural gas pipeline that would connect its Hill-Lake gas storage facility with both Lone Star Pipeline Co.’s Line “X” and the El Paso/TXU Fuels North Texas Pipeline in Eastland County near Dallas/Fort Worth (see Daily GPI, July 31).

Just last month, Duke Energy Trading and Marketing LLC signed a contract to receive load following and load balancing services from Falcon for the 245 MW Encogen Power Plant located near Abilene, TX. Duke is the fuel manager for the plant, which will be served by the Hill-Lake gas storage facility (see Daily GPI, Sept. 14).

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