FERC Thursday issued Sawgrass Storage LLC a certificate to convert a depleted natural gas reservoir in northern Louisiana to an interstate gas storage facility that would serve gas and power markets in Oklahoma, Texas, Arkansas and Louisiana.

Sawgrass Storage, which is affiliated with Samson Investment Co. and Nicor Inc., proposes to site the storage facility in the depleted South Downsville Field, which is about 20 miles northwest of Monroe, LA, near the town of Downsville. The project seeks to convert the Vaughn Sandstone Formation, proving up to 44.5 Bcf of storage capacity, of which 30 Bcf would be working gas capacity. The company said it expects the project to go into service in early 2013.

The project, which received a favorable environmental review last November (see Daily GPI, Nov. 28, 2011) is designed to have a maximum injection and withdrawal capacity of 300 MMcf/d and would be completely cycled 1.7 times per year, according to Sawgrass. The facilities would interconnect, through a 30-inch diameter, 13.9-mile header pipeline, with the Midcontinent Express Pipeline, approximately nine miles southeast of Farmerville, LA.

Sawgrass’ location provides a good opportunity to receive gas from pipelines that bring gas from diverse and prolific supply sources, including the gas being produced in the Haynesville, Barnett, Woodford, Bossier and Eagle Ford shale formations. Its delivery flexibility will also provide access to Southeast, Northeast and Midwest markets, the developer said.

As a result of a nonbinding open season held in late 2010, Sawgrass said it has received 14 expressions of interest for storage capacity. However, it said it has not signed any precedent agreements yet.

The Federal Energy Regulatory Commission (FERC) approved the storage project over the objections of some landowners. “We find that on balance the benefits that the new storage facility will provide outweigh the burdens it will impose,” the FERC order said [CP11-523].

The Commission granted a request of Sawgrass to charge market-based rates for storage and hub services once the projected is placed in service.

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