The Federal Energy Regulatory Commission issued a certificate Wednesday to SG Resources Mississippi LLC. (SGRM) to build and operate a new high-deliverability salt dome gas storage facility in Greene County, MS.

The proposed facility, to be called Southern Pines Energy Center, will consist of two underground caverns, with a combined working gas capacity of 12 Bcf, deliverability rate of 1.2 Bcf/d and maximum injection capacity of 600 MMcf/d. One of the caverns is targeted for in-service in December 2003, while the other is scheduled to begin operation in December 2004, the FERC order said [CP02-229]. SGRM noted that the 80-acre site would be able to accommodate three additional caverns to support future growth in demand.

SGRM’s storage project “will further the development of needed natural gas infrastructure and will serve a growing market for high-deliverability storage for the gas-fired electric generation market. [It] also will serve the public interest by providing hub services,” and “should contribute to the local economy,” the Commission noted in approving the project.

During its open season for the project, SGRM reported it received non-binding nominations for 34 Bcf of storage capacity, and has executed a precedent agreement with Aquila Merchant Services for 3 Bcf of working gas capacity for a primary term of 10 years.

SGRM also was awarded authority to charge market-based rates for proposed storage and hub services that are bundled with storage-related transportation, the order said. The location of the project was chosen primarily to serve as a supply and storage market hub for nine major pipelines serving the southeastern United States.

SGRM said the Southern Pines facility initially will have a bi-directional interconnect with the Destin Pipeline, which provides direct access to the Southern Natural Gas, Tennessee Gas Pipeline, Florida Gas Transmission, Gulfstream and Gulf South Pipeline systems. Construction plans include a phase two development with bi-directional direct interconnect to Florida Gas Transmission, Transco and Gulf South pipelines, which the company plans to present for regulatory approvals in early 2003. These additional direct interconnects will be operational by the first quarter of 2004.

SGRM filed its project application with FERC in May (see Daily GPI, May 23). The company said it is currently negotiating several long-term firm storage service agreements covering service at the Southern Pines Energy Center.

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