FERC issued an order Monday vacating certificate authority previously granted to NE Hub Partners in 1998 for a 6 Bcf high deliverability storage project in Pennsylvania (see Daily GPI, April 16, 1998). In April, NE Hub, which is now owned by Dominion Resources, requested that its certificate be vacated because the storage project is uneconomic and has no customers.

“NE Hub states that it continues to explore the substantial potential for development of this project on a smaller scale, given the project’s natural advantages of proximity to major pipeline systems and to growing northeastern markets,” FERC said in its order.

“Further the ongoing evolution of technology for developing salt caverns for natural gas storage in bedded salt formations will assist in future development of such projects. Currently, however, NE Hub considers its project no longer economically feasible as measured against current natural gas storage markets. Consequently, NE Hub requests that the certificate be vacated without prejudice to NE Hub’s future reference to materials filed in this docket in the even [it] refiles for certificate authorization of any revised project.”

NE Hub told the Commission in April that all precedent agreements that previously supported the project have been terminated or have expired on their own terms and that no customers will be impacted or any service terminated.

The project originally was to include bedded salt caverns with a total of 7.8 Bcf of capacity, including 5-6 Bcf of working capacity and 1.8 Bcf of cushion gas. The facility was expected to have an injection rate of 250 MMcf/d, and a maximum withdrawal rate of 500 MMcf/d. NE Hub originally entered into 15-year storage service contracts with now defunct Tejas Power Corp. for 1.25 Bcf/d of working gas capacity and with Southern Connecticut Gas for about 0.12 Bcf/d. It also had signed a 10-year agreement with Aquila Energy Marketing for about 0.5 Bcf/d.

But the project was controversial from its inception because its original planners, Market Hub Partners (now part of Duke Energy), intended to drill through a large operating storage field to the salt deposits beneath the field in order to develop caverns for holding gas (see Daily GPI, Aug 28, 1998). The owners of the existing storage field, CNG Transmission, which is now Dominion Transmission, and Penn Fuel Gas, which now is part of PPL, opposed the NE Hub project because of the storage competition that it would bring and the danger its development would pose to their existing operations.

Dominion ended up buying the project partly in an effort to kill it. But according to the FERC order, NE Hub may eventually be resurrected to provide the Northeast with much needed high-deliverability storage if a way can be found to avoid damaging existing storage operations.

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