FERC has issued UGI Storage Co. a certificate to acquire from UGI Central Penn Gas Inc. (UGI CPG), own and operate 14.7 Bcf of underground gas storage capacity in north-central Pennsylvania, in the heart of the state’s portion of the Marcellus Shale play.

The Federal Energy Regulatory Commission (FERC) also granted UGI Storage the right to sell storage services at market-based rates. UGI Storage is owned by UGI Energy Services Inc. (UGIES), a subsidiary of UGI Corp.

The facilities are operational and service from UGI Storage will be available beginning with the upcoming gas injection season beginning on April 1. The service will be provided from three underground storage fields in Tioga, Potter and Cameron counties in north-central Pennsylvania.

“These fields are located in the heart of the Pennsylvania Marcellus Shale region,” said Peter Terranova, UGI Storage vice president. “Storage customers will have access to Dominion Transmission, Transcontinental Gas Pipe Line, Tennessee Gas Pipeline and UGI CPG’s gas utility distribution system.

“Customers of UGI Storage Co. potentially will have access to Millennium Pipeline, Empire Pipeline, Columbia Gas Transmission, Spectra Energy and significant amounts of Marcellus Shale gas being produced in and around the storage fields through a planned interconnection with the PENNSTAR Pipeline, a proposed joint venture between UGIES and NiSource Gas Transmission and Storage.”

Last year UGIES agreed to gather the Marcellus production of Citrus Energy Corp. in Wyoming County, PA (see Daily GPI, Sept. 22, 2010). Last summer UGI Corp. said it would be spending about $300 million over the next two years on midstream infrastructure development in the Marcellus Shale (see Daily GPI, Aug. 16, 2010).

An open season for the storage capacity is to begin Jan. 17 to solicit bids for service. Capacity will be allocated to the highest bidder(s), and all winning bidders will secure rights-of-first-refusal for service after March 31, 2012 under FERC regulations. The open season will close Feb. 16.

A previous open season was held early last year (see Daily GPI, Feb. 16, 2010).