The Federal Energy Regulatory Commission Thursday handed out early Christmas gifts to two storage companies, issuing certificates to Southeast Gas Storage LLC and Arlington Storage Co. LLC for projects in Mississippi and New York, respectively.

Southeast Gas Storage, a subsidiary of El Paso Corp., proposes to convert a nearly depleted oil and natural gas reservoir into a high-deliverability gas storage facility approximately 3.5 miles northwest of Caledonia in Monroe and Lowndes counties, MS. The Black Warrior Storage Project would provide 24.7 Bcf of working capacity to customers in the region and is targeted for service in June 2010. It would have a maximum withdrawal rate of 500 MMcf/d and a maximum injection rate of 400 MMcf/d [CP08-418].

The proposed storage facility would be strategically located in a region where it would be able to store gas from Gulf Coast producers, liquefied natural gas (LNG) terminals and additional supply coming from the Midcontinent via new pipelines, the company told FERC. Southeast held a nonbinding open season earlier this year and received bids for approximately 60 Bcf of capacity, or almost three times the capacity of the project.

The project calls for the construction of 4.6 miles of 24-inch diameter lateral pipeline extending from the Tennessee Gas Pipeline tie-ins to Southeast’s proposed 24,000 hp Hamilton Compressor Station; gathering pipelines; 15 new horizontal withdrawal/injection wells; the conversion of four existing active wells to observation wells; the conversion of nine plugged and abandoned wells to observation wells; and the conversion of two active wells to injection/withdrawal wells, according to the Houston-based company.

FERC approved Southeast’s request to sell storage services at market-based rates.

Arlington Storage, a subsidiary of Kansas City, MO-based Inergy LP, got approval to convert an abandoned natural gas production field in Bath, NY, into a storage field to be named Thomas Corners Storage Field. The field would have a total working capacity of approximately 7 Bcf, along with maximum withdrawal and injection capabilities of 140 MMcf/d and 70 MMcf/d, respectively, according to the FERC order [CP08-96]. It plans to place the expansion facilities in service in fall 2009.

The new storage capacity is especially critical along the Mid-Atlantic/Northeast pipeline corridor, which serves major industrial and electric generating gas consumption markets, Arlington Storage said. It noted that gas supply is being brought to these markets not only from traditional Gulf Coast supply sources, but also from Canada, the Rocky Mountains and the LNG import terminal at Cove Point, MD.

In May Arlington Storage reported that it had sold out of all available capacity in its Thomas Corners project (see Daily GPI, May 8). Thomas Corners is expected to interconnect with Tennessee Gas Pipeline’s Line 400 and Columbia Gas Transmission’s A-5 line, which accesses the Millennium Pipeline.

FERC approved Arlington Storage requests for market-based rate authority and a waiver of the agency’s shipper-must-have-title requirement so it can obtain off-system capacity that may be necessary to provide storage services to its customers.

Inergy acquired Arlington Storage in late 2007 (see Daily GPI, Sept. 6, 2007). In addition to Thomas Corners, Arlington Storage is the majority owner and operator of Steuben Gas Storage Co., which has a storage facility in Steuben County, NY, with 6.2 Bcf of working gas capacity. Arlington Storage parent Inergy also owns the Stagecoach storage operation in New York.

When all its expansions are completed, Inergy estimates that it will control more than 40 Bcf of working storage capacity, making it one of the largest independent gas storage operators in the Northeast.

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