California regulators last week released a final environmentalimpact report for the state’s second merchant underground naturalgas storage project in the Sacramento Valley of northernCalifornia. Absent new opposition from surrounding landowners,Texas-based Western Hub Properties hopes to have its $80 millionstorage project operating by the end of this year, following ayear’s delay in the approval process for environmental review.

Western Hub is also pursuing a similar-sized underground storageproject in Texas and it has identified a site for a secondCalifornia storage operation in the Bakersfield area, according toJim Fossum, Western’s California operations manager.

Final approval of the Lodi Gas Storage Project located south ofSacramento should come in May, Fossum said, meaning thatconstruction could begin this summer and be operational before theend of the year. “We see the environmental report as the ‘light atthe end of the tunnel’,” Fossum said.

Under the California Public Utilities Commission’s procedures, aproposed decision from the administrative law judge for the case isdue by mid-March, after which there is a 30-day period before theproject can come before the five-member commission for a finaldecision, a CPUC spokesperson said.

“We hope to be on-line, and that is ‘hope’, this year because wealready have our compressors and pipe, so it is just a matter ofgetting crews there and that can go pretty quickly,” Fossum said.”In the best of all worlds it would be this year; in the worstcase, it would be a year from now.”

Western Hub has some of its customers lined up, and it is incurrent discussions with others, said Fossum, declining forcompetitive reasons to even identify the types of customers,although they are expected to be large shippers, marketers, powerplant operators and other large industrial customers.

The Lodi project is designed for full operation with a 12 Bcfworking capacity, with 400 MMcf/d injection and 500 MMcf/dwithdrawal capacities. It will be connected to Pacific Gas andElectric’s backbone transmission system through a 35-mile pipeline.

Western Hub’s similar-sized Texas project is south of SanAntonio and would be connected with three natural gas transmissionsystems in the area: Houston Pipeline, PG&E-Texas (boughtrecently by El Paso) and the City of San Antonio. “We expect tohave it on-line the same time as Lodi,” Fossum said.

Fossum said Western is “moving ahead” with a second Californiasite in the Bakersfield area, but he declined to give any furtherdetails, noting Western Hub expects to have more definitiveinformation next month. He did say that if a second Californiaproject moves ahead, Western expects to have it operational byearly 2002.

Unlike northern California, storage in the Bakersfield areawould not have to necessarily connect with the local utilitytransmission system of Southern California Gas. The combined KernRiver and Mojave interstate pipeline also comes into the area.

Richard Nemec, Los Angeles

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