FERC has issued a favorable environmental assessment (EA) to Liberty Gas Storage LLC for a proposed 17.5 Bcf expansion of its natural gas storage facility in Louisiana, which has been mired in problems and remains incomplete. Meanwhile Sempra Energy, one of the storage project’s sponsors, reports that some progress is being made with the stalled project.
In November Sempra Energy CEO Don Felsinger disclosed that the storage project might be shelved if the company couldn’t find an engineering solution to cavern development problems. Sempra Pipelines & Storage and ProLiance Transportation & Storage LLC jointly own the proposed storage facility in Calcasieu and Beauregard parishes. In a worst-case scenario, he indicated that Sempra Energy might have to write off about $65 million to cover the company’s share of the salt dome storage project (see Daily GPI, Nov. 11, 2008).
“We’re continuing to address the well completion problem and we’re making some progress,” said Sempra spokesman Art Larson Monday. He declined to say whether Sempra still was considering scrapping the project. Larson said the company may have an update on the Liberty Gas Storage project during its Feb. 24 earnings call with analysts and reporters.
In the meantime, the Federal Energy Regulatory Commission is moving closer to approving an expansion of a storage facility that is stuck in limbo. The proposed expansion, which would be located in Cameron Parish near Hackberry, LA, would add 17-18 Bcf of capacity to the initial 17 Bcf two-cavern project that remains in the construction phase.
In its EA on the expansion, FERC staff said “approval of the proposed project, with appropriate mitigating measures, would not constitute a major federal action significantly affecting the quality of the human environment.” The proposed expansion calls for conversion of three existing caverns to gas storage and development of one new cavern, as well as the addition of new compression and pipeline facilities. The project would be operational by 2010, according to Sempra.
The original two-cavern project and the expansion are being developed in conjunction with a 35-mile takeaway transmission pipeline from Sempra’s liquefied natural gas (LNG) terminal that is under construction in Cameron, LA, along the Gulf of Mexico. The LNG project is expected to be complete in mid-year, Larson said.
The cavern that is experiencing development problems is the larger (11 Bcf capacity) of the two original caverns, Felsinger said in November. If the project has to be abandoned, Felsinger and COO Neal Schmale said Sempra has other caverns that would “fully replace” the two involved in Liberty.
Felsinger referred to “subsurface issues” that have delayed completion and caused Sempra’s pipeline/storage unit to analyze whether it can, in fact, correct the issues. “If not, it may require us taking an impairment charge of approximately $65 million after taxes for our 75% share of the project. Alternatively, if [the] corrective actions are successful…we would expect to take the facility into service in the first half of [this] year.”
Sempra Pipelines owns 75% of the Liberty Gas Storage project, while ProLiance owns the remaining 25%.
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