Potential storage customers apparently are scrambling for capacity in NUI Corp.’s proposed 7.6 Bcf Richton salt cavern, which the company plans to develop in Perry County, MS. NUI said it received expressions of interest for 18 Bcf of storage space in the facility in a non-binding open season it held between May 29 and July 3.

However, it is typical for companies to overbid or enter the open season process simply to gather information on a storage field or pipeline capacity expansion. A rule of thumb is to expect about one-third of the expressions of interest to eventually turn out to be signed long-term agreements. If one-third of the expressions of interest end up becoming signed contracts for space in Richton, NUI will have nearly 80% of its capacity subscribed, a respectable amount from a first open season on a new storage project in a highly competitive storage arena such as the Gulf Coast region. The region, including Texas, Louisiana, Mississippi and Alabama, has multiple established storage fields and more than 15 new or proposed fields.

NUI already is in the process of negotiating with potential customers to establish precedent agreements for the storage capacity. It plans to create two storage caverns with 3.8 Bcf of working gas in each during the initial phase of development of the Richton storage field. In the initial phase, the facility will be capable of delivering up to 600 MMcf/d. The site has expansion capabilities of two more caverns for a total capacity of up to 14 Bcf of working gas. As a salt dome storage facility, Richton will offer quick-fill, quick-withdrawal capabilities. NUI expects service to begin in mid 2004 for the initial phase.

As part of the project, NUI plans to build a 14-mile pipeline to connect with Destin Pipeline, which will provide direct access to Transcontinental Gas Pipe Line, Tennessee Gas Pipeline, Southern Natural Gas, Florida Gas Transmission, Gulfstream and Gulf South Pipeline. NUI is continuing to work closely with Destin to facilitate the development of this project.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.