The Federal Energy Regulatory Commission has given Central New York Oil and Gas Co. (CNYOG) the green light to begin commercial operation of phase one of its Stagecoach project, a high-performance underground natural gas storage facility that will serve the Northeast gas markets.

The Stagecoach Storage Field Project, which was developed at a gas-producing field located in Tioga County, NY, and Bradford County, PA, is being implemented by CNYOG in two phases. The initial phase has an initial working gas capacity of about 12 Bcf, and is capable of supporting withdrawals of up to 500 MMcf/d and injections of up to 250 MMcf/d. The second phase, which will have an estimated 9 Bcf of working gas capacity, is expected to be in operation in the latter part of 2003, according to CNYOG.

The company will have to get FERC approval for the second phase, given that the certificate specified that the storage level in the Stagecoach Storage Field could not exceed 16.75 Bcf without prior agency authorization.

When the project certificate was awarded in February 2001, CNYOG affiliate, eCORP Marketing LLC, had bid $22 million for the entire capacity of the storage field and had signed a binding 20-year precedent agreement, but CNYOG told FERC that it was negotiating with eCORP to take a smaller share of the capacity of the Stagecoach Storage project so that others could use it.

CNYOG has indicated that it eventually plans to connect Stagecoach to the Twin Tier Power Plant being developed by another eCORP affiliate approximately four miles northwest of the storage facility at the Lounsberry Industrial Park Site in Nichols, NY.

CNYOG was given the go-ahead to charge market-based rates for firm and interruptible storage services provided by the Stagecoach project. However, FERC said that the rates would be subject to re-examination in the event CNYOG expands its storage capacity beyond the amount authorized by the Commission or if it acquires new facilities.

In granting the market-based rates, FERC said that CNYOG’s share of the storage market in the Pennsylvania and New York region, which is largely dominated by CNG and National Fuel, would be small. It estimated CNYOG, as a new market entrant, would have a 2.8% share of the working gas capacity, and 4.3% of the peak-day deliverability capacity.

In conjunction with the project, El Paso’s Tennessee Gas Pipeline has constructed a 23.7-mile, 20-inch diameter lateral line that connects the Stagecoach storage facility to its existing 300 Line. The so-called Stagecoach Lateral will provide up to 500 MDth/d of firm transportation from the storage field to the 300 Line. In addition, Tennessee was authorized to expand its 300 Line by 100 MDth/d to accommodate the deliveries from the storage field to the Northeast market.

The lateral facilities have been operational since January, and have been injecting natural gas into the storage facility since February, an El Paso spokesman told NGI.

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