In the midst of injecting 3.5 Bcf of cushion gas, Western Hub Properties indicated last Tuesday that its initial commercial start up for California’s second merchant underground storage project will begin in mid-December with about two-thirds of the project’s 12 Bcf working capacity under contract, according to Western Hub’s California project manager, Jim Fossum.

The Lodi Storage Project, located about 35 miles south of Sacramento, CA, was purchased in August by Aquila, Inc. in partnership with the ArcLight Energy Partners Funds, subject to approval from the California Public Utilities Commission. It is being linked to the Pacific Gas and Electric transmission pipeline backbone system via a 35-mile pipeline.

“In mid-December we expect to be receiving customer gas,” said Fossum, who noted that Western Hub is still pursuing a potential second merchant storage site in the southern half of the state near the Wheeler Ridge major transmission pipeline interconnection point, south of Bakersfield in the southern end of the San Joaquin Valley, but he expects that to be “a long process” getting sufficient data for a state application.

Lodi interconnection construction work should be wrapped up next week, according to Fossum, who is still operating the field for Western Hub. “It is just a matter of PG&E knocking a hole in its pipeline and that has been scheduled,” he said. Western, which is owned by its management team headed by CEO Tom Dill and by Haddington Ventures, Haddington Energy Partners and JPMorgan Partners, will have the field ready next month for its customers, which initially include the national power plant developer/operator, Calpine Corp. Fossum noted, however, that how much and when working gas supplies get injected will depend on weather and the demand for electricity.

The Lodi project initially is geared for injection rates of 250 to 400 MMcf/d and a withdrawal rate of 500 MMcf/d. Ultimately, with a phase two expansion, injection and withdrawal will both be 500 MMcf/d, Fossum said, noting that working capacity would then jump to about 15 Bcf,

“A substantial portion of our space is rented already,” Fossum said. “If customers want to rent the space and hold up filling it, that is okay, and it is also (obviously) okay if they want to fill the space now (in December), too. So far, PG&E has been good to us; they have been allowing us to put in quite a bit of (cushion) gas at this point.”

Aquila reportedly paid $220 million for Western Hub’s Lodi Project, which intends to recycle its capacity about six times annually.

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