Illinois-based Nicor Inc.’s Central Valley Gas Storage Project in Northern California will hold an open season before the end of this year, an executive with the project told the LDC Forum: Rockies & West meeting Tuesday in Los Angeles.
Tim Hermann, vice president for midstream operations with Nicor and its first storage venture in California, participated in a panel looking at new infrastructure projects in the West. The other projects discussed were Merchant Energy Holdings’ storage projects in Wyoming and Louisiana, and TransCanada’s Bison pipeline from southeast Wyoming to North Dakota.
These projects were all touted by their sponsors as ahead of the future demand growth they see in the years ahead, but other speakers at the two day conference expressed concerns in the near-term about a growing oversupply of gas and gas infrastructure (see other item).
Nicor gained state regulators’ approval last year (see Daily GPI, Oct. 20, 2010) for its new underground storage project in the north central valley that will be linked to Pacific Gas and Electric Co.’s (PG&E) backbone transmission pipeline system. Construction began in April this year and will wrap up early in 2012, Hermann said.
With seven underground storage fields with a collective capacity of 150 Bcf in the northern Illinois region and a joint venture storage project in Louisiana, Nicor has a track record in the gas storage sector.
In response to questions, Hermann confirmed that an open season for the 11 Bcf capacity, three- and four-turn storage facility is imminent.
Andy Lang, CEO and founder of Merchant Energy Holdings, said his East Cheyenne Storage Project in northeast Colorado already completed its open season and is a Federal Energy Regulatory Commission-regulated facility that is “open for business,” offering 2 Bcf of capacity to start, working up eventually to 14 Bcf to 20 Bcf of total capacity by 2015.
In response to questions about oversupply of gas storage, both Hermann and Lang contend that in the Rockies and Northern California that is not the case. “I don’t think there is an oversupply, particularly if you take a longer view,” Lang said. “You have to ask if you want to buy low and sell high, and if so, storage is a way to do that. We sit on the eastern flank of the Rockies, and there is not a lot of storage in that area.”
Hermann said Nicor looks at today’s low gas prices as exactly the right environment for developing storage. “The way power generators consume their gas with various swings is where the demand for storage comes from.”
Todd Johnson, director of marketing in the western region, outlined TransCanada’s extensive U.S. pipeline and storage operations, and gave details on Bison’s return to service Monday after a July 20 rupture in a segment in Wyoming (see Daily GPI, July 25). The Pipeline Hazardous Materials and Safety Administration gave Bison clearance to resume operations following a testing and review of the line, he said.
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