Omaha, NE-based Tenaska Power Fund LP (TPF) and Houston-based eCORP LLC on Monday unveiled plans to develop a new high-performance natural gas storage facility near Uniontown in southwestern Pennsylvania. The facility, which will be developed by a jointly owned entity, Chestnut Ridge Storage LLC, will offer 17.5 Bcf of working gas capacity in its first phase of development.

The companies estimate that the total development cost will be $175 million. The project, which is being built in a depleted reservoir, is expected to begin operation in the first quarter of 2009, pending Federal Energy Regulatory Commission approval. In addition, TPF and eCORP have agreed to explore development of similarly situated projects near the Chestnut Ridge facility.

The project’s sponsors said the project was strategically located near Uniontown to be able to connect to several pipelines, including those owned by Dominion Transmission Inc., Columbia Gas Transmission Corp. and Texas Eastern Transmission Co.

“We’ve been working on this project for quite some time trying to get the acquisition of the field in place,” said Steve Clifton, business development manager with eCORP. “It looks like we are on track in duplicating what we did in Upstate New York with the Stagecoach Phase 1 project.”

As for the positioning of the Chestnut Ridge facility, Clifton said the interconnectability is verified, which is a much different situation from Stagecoach. “With Stagecoach, we had ambitions for interconnecting it to more pipelines, but the Millenium Pipeline was very slow to materialize,” he told IPI. “With Chestnut Ridge, we actually enjoy the benefit of multiple pipelines in place. The facility’s location also puts us in a position to support the movement of gas from the Midcontinent through pipelines such as the Rockies Express. That gas is going to be deposited in eastern Ohio and western Pennsylvania, so we believe the kind of flexible storage facility that we are talking about putting in place would be ideally suited.”

Looking at further phases of the project, Clifton said eCORP has several thousand acres of leasehold around the Chestnut Ridge site, which could be developed for storage down the road. “This area of the country’s geology is suitable for storage development, which makes it no secret as to why most of the natural gas storage facilities in the United States reside in this location,” he said. “It is also in the right location from a market perspective. Our arrangement with Tenaska anticipates that we will use this project as a Phase 1. We will hopefully be able to make economic and geologic sense out of some of these other potential sites that are proximate to this facility and expand it as time goes on.”

Paul G. Smith, senior managing director of Tenaska Capital Management LLC, which provides management services to TPF, said there is excellent potential for expanding the geographically positioned Chestnut Ridge facility to take advantage of upstream and downstream opportunities. “This is TPF’s second investment in natural gas storage,” he said. “Given the dynamics of the gas marketplace, storage facilities are becoming an increasingly important part of the gas delivery system and, we believe, will continue to have strong asset value.”

Last month, Caledonia Energy Partners LLC — in which TPF has a 50% ownership interest — placed into service a high-deliverability, multi-cycle storage field in northeast Mississippi with capacity to store 11.7 Bcf of working gas (see Daily GPI, May 2). The facility was originally a nearly depleted natural gas reservoir.

In commenting on the Chestnut Ridge facility, eCORP LLC CEO John Francis Thrash said, “The combination of our development and operations skills in underground natural gas storage with Tenaska Capital’s finance and marketing skills will result in a project of outstanding quality and flexibility, similar to that achieved by eCORP in developing the first phase of the Stagecoach Natural Gas Storage Facility in upstate New York, which was sold in 2005” (see Daily GPI, July 12, 2005).

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