Absent a showing of market support, the Federal EnergyRegulatory Commission staff has threatened to dismiss Petal GasStorage L.L.C.’s amended proposal in which it seeks to expand thedeliverability of its storage facilities in Mississippi.

In the amended application, which was filed in mid-February,Petal assured FERC that its affiliate, Tennessee Gas Pipeline, had”sufficient primary firm, secondary firm and interruptiblecapacity” on its 500 Line to provide downstream delivery for all ofPetal’s existing storage volumes, as well as the additional volumesthat would flow from storage expansion project that was approved bythe Commission in March, staff said [CP00-59].

However, Southern Company, which signed up for much of Petal’sexpanded volumes, has since informed FERC that the amendedapplication doesn’t satisfy the terms and conditions of itsprecedent agreement with Petal on a stand-alone basis, staff noted.Specifically, it won’t provide Southern with 700,000 MMBtu/d offirm storage deliverability into interconnects with SouthernNatural Gas, Destin Pipeline and Transcontinental Gas Pipe Line.

Southern Company’s precedent agreement was based on Petal’soriginal proposal, which called for three new pipelineinterconnects — with Transco, Southern and Destin — to be builtto its storagefacilities in Mississippi. But Petal later scrappedthe original proposal in favor of expanding its existinginterconnect with new affiliate Tennessee, which serves Petal’sstorage facilities in Forrest County, MS. In conjunction withPetal’s revised proposal, Tennessee says it plans to ask FERC forauthority to expand its 500 Line to accommodate increaseddeliveries from Petal. It has not filed an application at theCommission yet. Both Petal and Tennessee are owned by El PasoEnergy.

Based upon the reservations expressed by Southern Company, “itnow appears that your application is incomplete because Petal’s[amended] expansion does not meet the terms of the precedentagreement with Southern…..and therefore lacks a market showing,”wrote Daniel M. Adamson, FERC’s director of the Office of EnergyProjects, in a letter to Petal Gas Storage.

“Explain why the Commission should continue to process Petal’sapplication absent a market showing or an application by Tennesseefor an incremental expansion that would satisfy the terms ofPetal’s precedent agreement with Southern Company. Without asatisfactory response, your application will be subject todismissal.” Adamson directed Petal to respond to the Commissionwithin five days of the April 4 letter.

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