The Federal Energy Regulatory Commission yesterday gave thefinal go-ahead, subject to certain conditions, to NE Hub PartnersL.P. to build its controversial underground storage caverns inTioga County, PA. The Commission action was a major blow to CNGTransmission and Penn Fuel Gas Inc., which have long protested NEHUB’s proposed facility because it would be located directly belowtheir existing Tioga Storage Complex. They contend their storagefacility could be “irreparably damaged” when NE Hub drills throughtheir storage complex to leach the caverns in which it plans tostore natural gas.

“After analyzing all of the record data in this proceeding, weconclude that the geological and engineering parameters for NEHub’s proposed underground natural gas salt cavern storagefacilities are well defined,” the order said [CP96-53]. “Ouranalysis shows that NE Hub’s proposed placement of the storagecaverns is well within the design criteria and confinement of thesalt bed.”

The Commission seconded the recommendations of AGM Inc., areservoir engineering and geotechnical consulting firm that itcontracted with to review the concerns raised by CNG Transmissionand Penn Fuel. It ordered NE Hub to comply with therecommendations, including 1) the first cavern well will be drilledbefore starting the drilling of the second cavern to mitigate therisk to the Tioga Storage Complex; and 2) two intermediate casingstrings will be set, one above and one below the OriskanyFormation, to contain the Oriskany bottom-hole pressure at amaximum of 0.75 psi per foot of depth.

To guard against any damage resulting from underground injectionof brine, “we are conditioning the certificate…to require thatnone of the brine produced in developing the proposed salt cavernsmay be reinjected underground by NE Hub or any other party,” theFERC order said. In addition, the certificate will limit NE Hub tothe construction of only two storage caverns. If it should want tobuild additional ones in the future, it will have to seek separatecertificate authorization.

NE Hub plans to complete the development of the two storagecaverns within 28 months after obtaining certification. Itestimates the maximum storage capacity for the caverns will be upto 7.8 Bcf, with a maximum working gas capacity of 5-6 Bcf and with1.8 Bcf of cushion gas. It said the facilities will have aninjection rate of 250 MMcf/d, and a maximum withdrawal rate of 500MMcf/d.

NE Hub has entered into 15-year storage service contracts withTejas Power Corp. for 1.25 Bcf/d of working gas capacity and withSouthern Connecticut Gas for about 0.12 Bcf/d. It also has signed a10-year agreement with Aquila Energy Marketing for about 0.5 Bcf/d.

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