After years of litigation over what will be the largest saltcavern storage project in the Northeast, NiSource subsidiary MarketHub Partners (MHP) finally has completed its first cavern well onthe Tioga Gas Storage project in northern Pennsylvania.

The Tioga project is due to commence commercial service in late2002 or early 2003 and reach 5 Bcf of working capacity and 500MMcf/d of deliverability by 2004. It is expected to be expanded to15 Bcf of working capacity and 1.5 Bcf/d of deliverability over thenext 10 to 15 years.

The first of 10 massive 42-inch diameter wells through theOriskany sandstone formation to the thick salt deposits below tookfour months to drill and reached a total depth of 6,000 feet lastweek. “This is the largest well of its kind — in terms ofwell-bore diameter — north of the Tennessee border and east ofthe Mississippi,” said NiSource Chairman Gary L. Neale. “Tioga willchange the way the Northeast pipeline grid operates because it willbecome the largest high-deliverability gas storage facility in theNortheast Market region. It will provide the market with ajust-in-time inventory of ready natural gas.”

Able to quickly cycle 10 times the inventory of nearby reservoirstorage facilities, the Tioga facility will provide a new type ofservice to a market with increasing demands for hourly flexibilityand peak day needs. Tioga initially will be connected at Ellisburg,PA, to National Fuel, CNG, Tennessee, and is expected to beconnected to Columbia and Transco at a later date.

“Moving Tioga towards commercial reality has been a contentiouseffort, but with the completion of the first well, we have fullyvalidated the project,” said Andy Lang, president of EnergyUSA’scommodity business unit, which is responsible for MHP.

The project has faced stiff competition from other operators,particularly CNG Transmission and North Penn Gas, who haveattempted to erect regulatory roadblocks every step of the way. CNGand North Penn own a gas storage field in the Oriskany formationdirectly above the salt caverns being leached for the TiogaProject. CNG has long argued that drilling 42-inch diameter wellsdirectly through its own storage field would seriously damage itsoperations. However, MHP geologists and engineers were able toconvince regulators the job could be done without damage toexisting storage operations or the environment. CNG has appealedFERC’s order, which rejected all of CNG’s arguments opposing theTioga project.

“I don’t want to comment on what their arguments may be to theU.S. District Court, but I do think many of their arguments will bemuted by virtue of the fact that we completed this well with no mudloss in the Oriskany and no pressure gain or loss,” said Lang. “Itwas kind of a non-event, which we all knew it would be. Peopledrill through other people’s producing horizons all the time. It’sdone in the oil and gas production business routinely.”

The first massive well contains 988 tons of telescoping steeltubing and 723 tons of cement surrounded by thick salt crystals,which provide a strong foundation for a high-pressure gas-deliverysystem. Lang said the company went through a painstaking process tomonitor the drilling of the well to ensure there was no damage tothe CNG/North Penn storage field. “We did pressure monitoring. Wehad to keep records on mud losses. We also had to drill with26-inch casing through their field.”

With the significant regulatory hurdles behind, MHP intends tomove rapidly to get the project in service in time to serve growinggas-fired generation in the region. Operations Vice President DaveNightingale said the project will significantly change the “gasdelivery picture for the Northeast. Most other traditional gasstorage facilities have limited capabilities that allow them todeliver an average of 0.1 Bcf of gas per day. Once it is fullydeveloped, Tioga will be able to deliver up to 1.5 Bcf per day.”

©Copyright 2000 Intelligence Press Inc. All rights reserved. Thepreceding news report may not be republished or redistributed, inwhole or in part, in any form, without prior written consent ofIntelligence Press, Inc.