Underground

After shutting in 2% of natural gas production and reserves to conserve underground pressure in its oilsands, Canada’s chief producing province has embarked on a test case as to whether it can keep open a far larger, mainstay source of natural gas.

Despite the news that a larger-than-expected 210 Bcf was pulled from underground storage last week, natural gas futures tumbled Thursday as traders looked toward moderating temperatures next week. After extending to a new 23-month prompt contract high at $5.85 in the moments after the 10:30 a.m. EST storage release, the February contract dropped 31 cents by 11:30 a.m. The contract continued lower in afternoon trading, closing at $5.458, down 21.5 cents from Wednesday’s settle. At 111,549, estimated volume was heavy and gave credence to the price retracement.

On the surface, a straightforward purchase of California’s second merchant underground natural gas storage facility is taking on major policy implications. It could provide a view this week of just how hard-and-fast the split is between pro-market and pro-enforcement regulators at the state regulatory commission.

On the surface, a straightforward purchase of California’s second merchant underground natural gas storage facility is taking on major policy implications. It could provide a view next week of just how hard-and-fast the split is between pro-market and pro-enforcement regulators at the state regulatory commission.

Houston-based Western Hub Properties officially opened California’s second merchant underground natural gas storage facility at Lodi, just south of Sacramento, on January 1 with about 78% subscription of the facility’s phase one working capacity of 9 Bcf, according to a Houston-based Western Hub marketing manager. Utilities and marketers are the bulk of the initial customers.

Houston-based Western Hub Properties officially opened California’s second merchant underground natural gas storage facility at Lodi, just south of Sacramento, on January 1 with about 78% subscription of the facility’s phase one working capacity of 9 Bcf, according to a Houston-based Western Hub marketing manager. Utilities and marketers are the bulk of the initial customers.

California’s second merchant underground natural gas storage project near Sacramento began injecting supplies this month, but its commercial start-up date has been pushed back to Dec. 1, according to the California operations manager for Houston-based Western Hub Properties LLC, the developer.

To keep up with the demand of its growing power generation portfolio, Williams has leased underground salt caverns in Lafourche Parish, LA, and plans to develop the caverns into a 10 Bcf natural gas storage facility in phases over the next five years. The proposed facility will be connected to several pipeline systems, including Williams’ Transco and Texas Gas systems, creating a hub to efficiently manage gas flow, the company said.

Although still not under construction Texas-based Western HubProperties’ Lodi Underground Storage Project announced Thursday ithas a deal with power plant developer/operator Calpine Corp., ofSan Jose, CA to provide storage services for up to 4 Bcf of naturalgas used to fuel some of Calpine’s growing list of Californiagenerating plants.