As energy storage generally becomes more important economically, a natural gas storage field proposed for an existing suburban residential area in Sacramento, CA, has its backers lamenting the political dust being stirred up (see Daily GPI, March 16). Nevertheless, the head of Sacramento Natural Gas Storage told NGI Wednesday he thinks the project ultimately will prevail.
“It may be a bloody mess, but I think we will get [the state and local] approvals,” said Jim Fossum, president of the project, which is backed financially principally by units of Wells Fargo Bank and a part of the New York City-based Fortress Investment Group LLC. A little piece of the financing comes from Colorado-based Iron Gate Capital LLC.
Fossum agreed that in some other parts of the country, the shale gas boom is driving up interest in new or expanded storage. In California, he sees that interest being derived from the fact that 85% of the gas comes from out of state, “so you better have some storage in case of interruptions on the systems.”
Fossum said he expects a California Public Utilities Commission (CPUC) administrative law judge’s recommendation in the next month. The process on the local city special-use permit will not get going until after the CPUC acts, he said.
While recent events in Japan and last September’s fatal San Bruno natural gas pipeline rupture raise safety concerns among the general public, Fossum said those events can also boost interest in have stable, cost-effective energy supplies available. Doubts about nuclear and greater reliance on renewable resources to produce electricity in combination would point toward greater need for gas storage, he said.
With an anchor customer for the proposed 379-acre Sacramento storage facility in a depleted gas field south of the state capital, Fossum said Sacramento Storage can wait to sign up other customers. The Sacramento Municipal Utility District (SMUD) is signed up under a long-term contract for a large chunk of the 7.5 Bcf capacity.
“That is big enough to more than carry us,” Fossum said. “Besides, if we sell additional storage rights now, we would have to discount it badly since we won’t be on line for another year or two. We don’t need to discount it, we can just wait.”
Unlike some other new and proposed storage projects in California, this one has no capability of expansion, he said. It is an $80 million project and remain fairly self contained, according to Fossum.
Sacramento’s city elected officials so far have not taken a stand on the storage project. Fossum views that as a positive sign.
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