After more than a year delay because of the struggling merchant energy business, SGR Holdings said its 12 Bcf Southern Pines Energy Center is back on track and subsidiary, SG Resources Mississippi LLC (SGRM) plans to proceed with construction of the high deliverability storage project in Greene County, MS, with service starting in 2006.

The project received a FERC certificate in October 2002, but by that time all of the merchant energy companies that had signed up for capacity in the proposed project were closing up shop, scaling back operations and beginning to sell off assets, said Mark Cook, a principal of SGRM (see Daily GPI, Oct. 11, 2002).

“When it was originally filed to be permitted, almost all of the respondents — there was 12 Bcf offered and 36 Bcf was bid on — were merchants. All those people went away, and then we had to go back and re-establish the market and find the utilities that had been served by the merchants. We worked the utility, generator and pipeline markets. We kind of started from scratch. It was a long process.”

Finally, the utilities are managing their own books again. The financial community has a renewed interest in storage projects. Liquefied natural gas (LNG) import terminals, which need storage for balancing, are cropping up all along the Gulf Coast and in the Bahamas.

“The whole market has improved,” said Cook. “In this area in the Southeast, with the growth in demand in Florida, more power plants, with the Gulfstream pipeline reaching the entire state, with LNG coming into the state, a lot of things have come together.”

Further illustrating the market turn around, SGR Holdings also recently sold the rights to the proposed 24 Bcf Pine Prairie Energy Center storage project to Sempra Energy, which is building the Cameron LNG import terminal in Hackberry, LA. The Pine Prairie salt cavern will be developed in Evangeline Parish, LA, near the Henry Hub with service targeted for the fourth quarter of 2005 (see Daily GPI, April 19).

“It shows the synergies that exist between these LNG facilities and these salt cavern storage facilities with multiple interconnects that can inject very quickly and withdraw very quickly during peak times,” Cook said.

When completed in 2006, Southern Pines will have two 6 Bcf storage caverns and will be capable of supporting natural gas withdrawal rates of up to 1.2 Bcf/d and injection rates of up to 0.6 Bcf/d. SGRM has been authorized to offer firm and secondary firm storage services at “market-based” rates that can be custom designed to meet the needs of individual customers. The company still must obtain final approvals from FERC and the Fish and Wildlife Service to begin construction activities.

In its first phase of development, Southern Pines will construct 24-inch diameter bi-directional interconnects with the facilities of Destin Pipeline Co. LLC, Florida Gas Transmission, Transcontinental Gas Pipe Line’s Mobile Bay lateral, and Gulfstream Natural Gas System. Phase II development plans include an extension of a storage pipeline header north to interconnect directly with the SONAT (Enterprise) and Tennessee Gas Pipeline Co.’s 500 Line. Southern Pines has executed interconnect agreements with FGT, Transco, Gulfstream and Destin.

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