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Colorado Interstate Gas Company (CIG) has asked FERC for authorization to commence service no later than June 29 on the Totem Gas Storage Field Project in Adams County, CO. The company said it was nearing completion of construction of the initial phase and injection of base gas. It proposes to then begin injections of up to 6 Bcf of working gas. The sole customer for the facility is Public Service Co. of Colorado (PSCo). “It is estimated that 90% to 100% of base gas will be injected by June 29,” CIG said in its Federal Energy Regulatory Commission (FERC) filing. “Work on the gas dehydration and conditioning plant will continue for several months.” Sustained withdrawal of storage gas will be available after the successful injection of PSCo’s working gas. FERC approved the Totem Gas Storage facility just over a year ago. It involved the conversion of a depleted oil and gas field near Denver for storage use to meet the existing peak-day and load-growth needs for local gas distribution systems along the Colorado Front Range area. The total planned capacity was 10.7 Bcf, composed of 7 Bcf of working gas and 3.7 Bcf of base gas. Totem storage is designed to connect with CIG’s existing pipeline network via CIG’s 164-mile High Plains expansion project, which FERC approved in March 2008.
Morgan Stanley Private Equity is partnering for a second time with the management team of Triana Energy Investments LLC, a venture that is expected to focus on acquiring natural gas properties in the Appalachian Basin’s Marcellus Shale. The investment with Triana is intended to be a first step in a “broader partnership” as the newly reformed Triana expands its operations in North America, said Morgan Stanley, the company’s majority stakeholder. No financial details were released. The Morgan Stanley affiliate pursued a similar investment strategy with predecessor Triana Energy Holdings LLC from 2001 to 2005. In 2003 the company acquired NiSource Inc.‘s exploration and production arm Columbia Energy Resources Inc., which consisted primarily of Columbia Natural Resources (CNR) and its 1.1 Tcf of reserves (see NGI, July 7, 2003). The assets were sold in 2005 to Chesapeake Energy Corp. for more than $2.2 billion (see NGI, Oct. 10, 2005).
Chevron Global Gas, a division of Chevron USA Inc., has completed a supply agreement with Ras Laffan Liquefied Natural Gas Co. Ltd. No. 3, an affiliate of RasGas Co. Ltd., for delivery of Qatari liquefied natural gas (LNG) at the Sabine Pass LNG terminal in Cameron Parish, LA, Chevron said Tuesday. The mid-term supply agreement provides for delivery of multiple cargoes of LNG from Qatar under flexible terms beginning in July 2009. Additional details were not disclosed. Chevron has also entered into a four-year agreement with a European company for access to a portion of Chevron’s capacity at Sabine Pass. The Federal Energy Regulatory Commission recently granted Cheniere Energy authority to make changes necessary at Sabine Pass to allow for the reexport of LNG should global market conditions warrant it (see related story).
NGS Energy is holding a binding open season through June 16 for gas storage services to be provided at its Leaf River Energy Center, a new salt cavern facility located in Smith County, MS. Westport, CT-based NGS obtained FERC approval for its Leaf River facility last year (see NGI, Nov. 10, 2008) and began construction in January. The facility will provide up to 32 Bcf of working capacity, injection capability of up to 1 Bcf/d and withdrawal capability of up to 2.5 Bcf/d. Leaf River will have a 43-mile pipeline header system that will offer interconnects with the Southern Natural Gas, Gulf South, Transco, Tennessee, Destin and KM Midcontinent Express pipelines. NGS said it has signed a firm storage service precedent agreement with Southern Companies Services Inc., which acted as agent for Alabama Power, Georgia Power, Gulf Power, Mississippi Power and Southern Power, for a 15-year term for 3 Bcf in Phase I and 3 Bcf in Phase II at the Leaf River facility. For information about Leaf River and the open season, contact Patrice Thurston at (203) 557-1000 or e-mail firstname.lastname@example.org.
Tricor Ten Section Hub LLC launched a nonbinding open season June 1 for its planned California underground natural gas storage and hub facility in southern Kern County 10 miles southwest of Bakersfield, within easy access of the Kern River and Mojave interstate pipelines. The open season will run through Sept. 30, targeting a 2012 commercial start for the facility, Tricor said. Depending on the results from the open season, Tricor said it could consider offering storage service to intrastate pipeline customers, too, by connecting its facility to the Pacific Gas and Electric Co. and Southern California Gas Co. transmission pipeline systems . Tricor said the facility would have 22.5 Bcf of capacity, 22.4 Bcf of which would be working gas. Tricor plans to drill 24 new horizontal wells, rework seven vertical wells and add 42,000 hp of compression. Ultimately, the plans are to provide four cycles annually with a maximum withdrawal of 1 Bcf/d and a maximum injection of 800 MMcf/d.
Sempra Energy‘s two natural gas distribution utilities have received clearance from the California Public Utilities Commission (CPUC) to proceed with seeking approval for off-system natural gas sales over the protests of regional air pollution regulators and power generators. The CPUC concluded that air quality issues had already been considered and could not be revisited in the current proceeding. The bigger issue of off-system delivery to various interconnection points is still to be resolved by state regulators. Southern California Gas Co. and San Diego Gas and Electric Co. previously obtained regulators’ approval for expanding their interruptible and firm off-system gas deliveries to neighboring private-sector utility, Pacific Gas and Electric Co. In response, the South Coast Air Quality Management District (SCAQMD) and the Southern California Generation Coalition (SCGC) raised air quality, gas quality and other environmental issues. If the CPUC approves off-system deliveries at points on the Sempra transmission pipeline system other than ones with PG&E, transportation customers of the two utilities would be able to send gas supplies to east-of-California customers. Separate protests were filed by SCAQMD and SCGC to the proposal.
Rapid City, SD-based Black Hills Corp.’s Iowa natural gas utility, Black Hills Energy, received approval from state regulators to increase rates by $10.4 million, or 5.8%, effective July 31. The new rates impact all of its Iowa gas customers — residential, commercial and industrial. The Iowa utility, which Black Hills acquired from Aquila in 2007, has not had a rate hike for more than three years. The increase approved by the Iowa Utilities Board (IUB) is designed to allow the utility to cover investments in the utility infrastructure and increased operating costs. Since the last rate hike in March 2006, Black Hills and its predecessor, Aquila, invested $25 million in the Iowa gas delivery system, Black Hills said. Some of the money also was spent to expand the system to add new customers. The request was filed June 2, 2008, and as is the practice in Iowa, interim rates went into effect June 15, 2008 while the general rate case was reviewed. Those interim rates remain in place until the permanent hike goes into effect at the end of July. Black Hills Energy was assigned a 10.1% return on equity and capital structure that is 51.4% equity and 48.6% debt. Under the new rate design more than half of the utility costs are to be recovered in a fixed monthly service charge, which for residential customers will increase to $15.60 and for commercial/industrial businesses to $23.60.
For the second time in six months the Idaho Public Utilities Commission (PUC) on June 1 lowered the retail natural gas rates of Spokane, WA-based Avista Utilities. Avista gas utility customers in Idaho will see an average 6.7% drop in their rates, directly related to the continued decline in wholesale gas costs. Avista’s gas customers received a 4.7% decrease last January and utility officials told the PUC they expect another decrease in October after Avista files its annual purchased gas cost adjustment. A PUC spokesperson said the regulators put the decrease in effect quickly on a special basis even though it will still review the full Avista rate filing and allow public comment on it through June 19. “The commission wanted customers to immediately realize the benefit of lower wholesale prices,” he said. Since last fall Avista has been steadily decreasing its retail natural gas rates in its headquarter state of Washington and Idaho. Avista has said in the two states collectively about 75% of the average residential gas utility bill is due to the cost of gas and pipeline transportation. The rest reflects Avista’s fixed cost to provide natural gas service.
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